SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
____________________
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 
Date of Report (Date of earliest event reported):  October 19, 2009
 
 Alba Mineral Exploration, Inc.
(Exact name of registrant as specified in its charter)
 
 
Delaware
333-150029
N/A
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

 
12 Daniel Road EastFairfield, New Jersey
 
07004
(Address of principal executive offices)
(Zip Code)


Registrant’s telephone number, including area code:   (973) 227-3230

 
2 Mic Mac Place, Lethbridge, Alberta, Canada T1K 5H6
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
   
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 
 
 
 

 
 
 
CURRENT REPORT ON FORM 8-K
 
BERGIO INTERNATIONAL, INC.
 
 
TABLE OF CONTENTS
 
 
 
 
 
     Page
     
  Item 1.01 Entry into a Material Definitive Agreement 3
     
  Item 2.01 Completion of Acquisition or Disposition of Assets  4
     
        Acquisition 4
        Description of Our Company  5
        Management's Discussion and Analysis or Plan of Operation  11
        Risk Factors  22
        Directors and Executive Officers  26
        Executive Compensation  28
        Security Ownership of Certain Beneficial Owners and Management  29
        Certain Relationships and Related Transactions  29
     
  Item 3.02 Unregistered Sales of Equity Securities  36
     
  Item 5.01 Changes in Control of Registrant  43
     
  Item 5.02  43
     
  Item 9.01  Financial Statements and Exhibits  39
     
     
 
 
 
 
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Item 1.01.                        Entry into a Material Definitive Agreement

The Acquisition

On October 19, 2009, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Diamond Information Institute, Inc., a publically held New Jersey corporation (“DII”). In connection with the closing of this transaction, we acquired all of the issued and outstanding shares of DII, which resulted in a parent-subsidiary relationship (the "Acquisition").

In addition, pursuant to the terms and conditions of the Exchange Agreement:

§  
The shareholders of all of the capital stock of DII issued and outstanding immediately prior to the closing of the Acquisition exchanged their shares into 2,585,175 shares of our common stock.

§  
As a result, immediately following the Acquisition, there were 7,618,625 shares of our common stock issued and outstanding.

§  
Our board of directors was reconstituted to consist of Berge Abajian who, prior to the Acquisition, was the sole director of DII.
 
§  
DII provided customary representations and warranties and closing conditions, including approval of the Acquisition by its shareholders.

As of the date of the Exchange Agreement and currently, there are no material relationships between us or any of our affiliates and DII, other than in respect of the Exchange Agreement.

The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Exchange Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.

Stock Purchase Agreement

Immediately following the closing of the Acquisition, in a separate transaction, our former Chief Executive Officer and sole director, Mr. Owen Gibson, agreed to purchase our former mining business in exchange for the cancellation and return all of his common stock into treasury. Specifically, in the stock purchase agreement (“Stock Purchase Agreement”), Mr. Gibson and certain of our shareholders retired 3,310,000 shares of our common stock in exchange for our prior business of mineral exploration through our subsidiary, Alba Mineral Exploration, Inc., an Alberta corporation.

The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Stock Purchase Agreement, which is filed as Exhibit 2.2 hereto and incorporated herein by reference.
 
 
 
 
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Item 2.01 .                        Completion of Acquisition or Disposition of Assets

As used in this Current Report on Form 8-K, all references to the “Company,” “Bergio International,” “we,” “our” and “us” or similar terms, refer to Alba Mineral Exploration, Inc., including its predecessors and its subsidiaries, except where the context makes clear that the reference is only to DII. Information about the Company and the principal terms of the Acquisition are set forth below.

Acquisition

The Acquisition . On October 19, 2009, in accordance with the Exchange Agreement dated October 19, 2009 we acquired all of the issued and outstanding shares of DII, which resulted in a parent-subsidiary relationship. In exchange for all of the issued and outstanding shares of DII, the shareholders of DII received 2,585,175 shares of our common stock which represented approximately 60% of our outstanding common stock following the Acquisition and related transactions described in Item 1.01 of this Current Report.

At the time of the Acquisition, neither we nor DII had any options to purchase shares of capital stock outstanding. Additionally, at the time of the Acquisition, neither we nor DII had any warrants to purchase shares of capital stock outstanding.

There were 5,033,450 shares of our common stock outstanding before giving effect to the stock issuances in the Acquisition and the cancellation of 3,310,000 shares by Mr. Owen Gibson and certain other shareholders. Following these events, there were 4,308,625 shares outstanding, including:

Shares                                                 Held by:
2,585,175                                           DII Shareholders
1,723,450                                           Existing shareholders

The shares of our common stock issued to the former shareholders of DII’s capital stock in connection with the Acquisition were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and/or Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering.

Prior to the Acquisition, there were no material relationships between us and DII, or any of their respective affiliates, directors or officers, or any associates of their respective officers or directors, other than as disclosed in this Current Report.

General Changes Resulting from the Acquisition . We have sold our interest in our prior business of mineral exploration and any assets that relate to that business to Mr. Owen Gibson and certain of our prior shareholders in exchange for the cancellation of 3,310,000 shares of our common stock. We intend to carry on the business of DII, as our primary line of business. We have relocated our principal executive offices to 12 Daniel Road EastFairfield, New Jersey 07004 and our telephone number is (973) 227-3230.
 
 
 
 
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Pre-Acquisition stockholders of DII will be required to exchange their existing DII stock certificates for our certificates. Our common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. As of October 19, 2009, our shares were quoted on the OTCBB under the symbol “ABMX.OB”

The Acquisition and its related transactions were approved by the holders of a requisite number of shares of DII’s common stock by shareholder meeting. Under New Jersey law, DII’s stockholders who did not consent to the Acquisition may demand in writing, pursuant to the exercise of their appraisal rights, that DII pay them the fair value of their shares. Determination of fair value is based on all relevant factors, except for any appreciation or depreciation resulting from the anticipation or accomplishment of the Acquisition.   One Hundred percent of the stockholders of DII approved the Acquisition and thus no appraisal rights may be exercised under New Jersey law.

Changes to the Board of Directors . Owen Gibson resigned as our sole officer and director. Pursuant to the terms of the Exchange Agreement, Berge Abajian who prior to the Acquisition was the sole director of DII, Inc., was appointed as our sole officer and director.

All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected by the board of directors and serve at the discretion of the board.

Accounting Treatment. The Acquisition is being accounted for as a purchase of the assets of DII. Consequently, the assets and liabilities of DII will be restated to their fair values. Our consolidated financial statements after completion of the Acquisition will include the assets and liabilities of both companies, our historical operations and the operations of DII from the closing date of the Acquisition.  Except as described herein, no arrangements or understandings exist among present or former controlling stockholders with respect to the election of members of our board of directors and, to our knowledge, no other arrangements exist that might result in a future change of control of the Company. We will continue to be a “small business issuer,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), following the Acquisition.

Description of Our Company

Company Overview

We were incorporated as “Alba Mineral Exploration, Inc.” on July 24, 2007, in the State of Delaware for the purpose of engaging in mineral properties. On October 19, 2009, we entered into the Exchange Agreement with DII, whereby we acquired all of the issued and outstanding common stock of DII.  We intend to change our name in the near future to Bergio International, Inc. ("Bergio International").

In consequence of entering into the Exchange Agreement, we have determined to pursue the business plan of DII. We are now in the business of designing and manufacturing upscale jewelry.

 
 
 
 
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Our Business

We are entering into our 20th year of operations and concentrate on boutique, upscale jewelry stores.  We currently sell our jewelry to approximately 150 independent jewelry retailers across the United States and have spent over $3 million in branding the Bergio name through tradeshows, trade advertising, national advertising and billboard advertising since launching the line in 1995.  We have manufacturing control over our line as a result of having a manufacturing facility in New Jersey as well as subcontracts with facilities in Italy and Bangkok.

 
It is our intention to establish Bergio International as a holding company for the purpose of acquiring established jewelry design and manufacturing firms who possess branded product lines.  Branded product lines are products and/or collections whereby the jewelry manufacturers have established their products within the industry through advertising in consumer and trade magazines as well as possibly obtaining federally registered trademarks of their products and collections.  This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

We intend to acquire design and manufacturing firms throughout the United States and Europe.  If and when we pursue any potential acquisition candidates, we intend to target the top 10% of the world’s jewelry manufactures that have already created an identity and brand in the jewelry industry.  We intend to locate potential candidates through our relationships in the industry and expect to structure the acquisition through the payment of cash, which will most likely be provided from third party financing, as well as our common stock but not cash generated from our operations.  In the event we obtain financing from third parties for any potential acquisitions, Bergio International may agree to issue our common stock in exchange for the capital received.  However, as of the date of this Current Report, we do not have any binding agreements with any potential acquisition candidates or arrangements with any third parties for financing.

Principal Products and Services

We have historically sold our products directly to distributors, retailers and other wholesalers, who then in turn sell their products to consumers through retail stores.  Independent retail jewelers that offer the current Bergio line are not under formal contracts and most sell competing products.

Our products consist of a wide range of unique styles and designs made from precious metals such as gold, platinum and Karat gold, as well as other precious stones.  We continuously innovate and change our designs based upon consumer trends and as a result of new designs being created we believe we are able to differentiate ourselves and strengthen our brands.  We sell our products to our customers at price points that reflect the market price of the base material plus a markup reflecting our design fee and processing fees.

Each year, most jewelry manufacturers bring new products to market. We believe that we are a trendsetter in jewelry manufacturing.  As a result, we come out with a variety of products throughout the year that we believe have commercial potential to meet what we feel are new trends within the industry.  The “Bergio” designs consist of upscale jewelry that includes white
 
 
 
 
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diamonds, yellow diamonds, pearls, and colored stones, in 18K gold, platinum, and palladium.  We currently design and produce approximately 50 to 75 product styles.  Prices for our products range from $400 to $200,000.

Our product range is divided into three fashion lines: (i)18K gold line, (ii) a bridal line, and (iii) a couture and/or one of kind pieces. Our officer and director, Mr. Abajian, consults regularly with the design teams of his Italian manufacturers, which usually results in a constant continuation of new products and sometimes entire lines being developed.  Typically, new products come on line approximately every 3 months and most recently, Bergio International introduced its latest collection “Power in Pink”, which launched in April 2008 year and consists of approximately 35 pieces made with pink gold and diamonds.  Depending on the timing and styling at any point in time, our products and collections would fall in one of the various categories shown below:

1.  
Whimsical. The whimsical line includes charms, crosses and other “add-on” pieces.

2.  
Middle. The proposed middle line will consist of fashion jewelry utilizing colored stones, diamonds and pearls applied to a variety of applications such as necklaces, pendants, earrings, bracelets and rings. The metals that we intend to use for the Middle line include platinum, 18K white & yellow gold.

3.  
Couture. The Couture line is our most luxurious line, and consists of one of a kind pieces, new showcase products each year, and predominantly utilizes diamonds, platinum and other precious metals and stones of the highest grade and quality available.

4.  
Bridal. The Bridal line is our core business. We attempt to stay on the forefront of trends and designs in the bridal market with the latest in wedding sets, engagement rings and wedding bands for both men and women.

Each year, we attempt to expand and/or enhance these lines, while constantly seeking to identify trends that we believe exist in the market for new styles or types of merchandise.  Design and innovation are the primary focus of our manufacturing and we are less concerned with the supply and capacity of raw materials.  Over the last 19 years, Mr. Abajian has been the primary influencer over the Bergio collections.  Mr. Abajian with his contacts, which are located mostly overseas, regularly meet to discuss, conceptualize and develop Bergio’s various products and collections.  When necessary, additional suppliers and design teams can be brought in as the market needs dictate. Management intends to maintain a diverse line of jewelry to mitigate concentration of sales and continuously expand our market reach.

Distribution Methods and Marketing

We continue to devote our efforts towards brand development and utilize marketing concepts in an attempt to enhance the marketability of our products.  During the past several years, we have carried out our brand development strategy based on our product quality and design excellence, which is highlighted through our sales personnel.  We have established significant networks and relationships with retailers which allow our products to be promoted and sold nationwide.  We maintain a broad base of customers and concentrate on retailers that sell fashionable and high end jewelry.  We also work with our customers to adjust product strategies based on the
 
 
 
 
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customer’s feedback to try and decrease the likelihood of overstocked or undesired products.

We intend to further promote our products and brand by participating in trade shows and various exhibitions, consumer and trade advertisements, billboard advertisements, as well as make specialty appearances in retail stores carrying our products.

Sources and Availability of Raw Materials and Principal Suppliers

Most of the inventory and raw materials we purchase occurs through our manufacturers located in Europe.  The inventory that we directly maintain is based on recent sales and revenues of our products but ultimately is at the discretion of Mr. Abajian and his experience in the industry.  Our inventories are commodities that can be incorporated into future products or can be sold on the open market.  Additionally, we perform physical inventory inspections on a quarterly basis to assess upcoming styling needs and consider the current pricing in metals and stones needed for our products.

We acquire all raw gemstones, precious metals and other raw materials used for manufacturing our products on the open market.  We are not constrained in our purchasing by any contracts with any suppliers and acquire raw material based upon, among other things, availability and price on the open wholesale market.

Approximately 80% of our product line is contracted to manufacturing suppliers in Italy, who then procure the raw materials in accordance with the specifications and designs submitted by Bergio International.  However, the general supply of precious metals and stones used by us can be reasonably forecast even though the prices will fluctuate often.  Any price differentials in the precious metals and stones will typically be passed on to the customer.

For the raw materials not procured by contracted manufacturers, we have approximately 5 suppliers that compete for our business, with our largest gold suppliers being Carrera Casting and Metro Gold.  Most of our precious stones are purchased from C. Mahandra & Sons and EFD.  We do not have any formal agreements with any of our suppliers but have established an ongoing relationship with each of our suppliers.

Customers

During the year ended December 31, 2008, Shane & Co. accounted for approximately 9.5% of our annual sales.  Previously, we had one customer, Western Stones and Metals, during the year ended December 31, 2007, that accounted for approximately 9% of its annual sales.  During the next twelve months, it is anticipated that Shane & Co. may account for more than 5% of our annual sales based on recent orders placed and our current projections.  We are not dependent on any specific customers as a result of having very few customers representing 5% or more of our annual sales.

Intellectual Property

Bergio is a federally registered trademarked name that we own.  Since the first trademark of “Bergio” was filed all advertising, marketing, trade shows and overall presentation of the our product to the public has prominently displayed this trademark.  As additional lines are designed and added to our products, we may trademark new names to distinguish the particular products and jewelry lines.

 
 
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Personnel

At December 31, 2008, we had 3 full-time employees and 2 part-time employees.  Of our current employees, 1 is sales and marketing personnel, 2 are manufacturing and 2 hold administrative and executive positions.  No personnel are covered by a collective bargaining agreement.  Our relationship with our employees is believed to be good.  We intend to use the services of independent consultants and contractors when possible or until we are able to hire personnel in house.

Competition and Market Overview

The jewelry design and manufacturer’s industry is extremely competitive and has low barriers to entry.  We compete with other jewelry design and manufacturers of upscale jewelry to the retail jewelry stores.  There are over 4,000 jewelry design and manufacturer’s companies, several of which have greater experience, brand name recognition and financial resources than Bergio International.

Our management believes that the jewelry industry competes in the global marketplace and therefore must be adaptable to ensure a competitive measure.  Recently the U.S. economy has encountered a slowdown and Bergio International anticipates the U.S. economy will most likely remain weak at least through the end of 2009.  Consumer spending for discretionary goods such as jewelry is sensitive to changes in consumer confidence and ultimately consumer confidence is affected by general business considerations in the U.S. economy.  Consumer spending for discretionary spending generally declines during times of falling consumer confidence, which may affect our retail sale of our products.  U.S. consumer confidence reflected these slowing conditions throughout 2008.  The impact of the slowing U.S. economy is not usually known until the second quarter of any given year in our industry thus it is hard to estimate the actual impact the slowing economy will have on our business.

According to the United States Department of Commerce outlook in 2008, the United States apparent consumption of precious metal jewelry was expected to grow over the new few years at a slow but steady rate, before picking up considerably in 2010.  A stronger economy, more spending by the baby boomers and young professionals with an overall trend toward luxury products will lead to future growth.  From 2007 to 2011, apparent consumption of precious metal jewelry is expected to increase by an average of 3.9% per year, totaling $14.0 billion in 2011.  Therefore, we intend to make strong efforts to maintain our brand in the industry through our focus on the innovation and design of our products as well as being able to consolidate and increase cost efficiency when possible through acquisitions.

Environmental Regulation and Compliance

The United States environmental laws do not materially impact our manufacturing operations as a result of having a large majority of our jewelry manufacturing being conducted overseas.  
 
 
 
 
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In fact, approximately 80% of our manufacturing is contracted to quality suppliers in the vicinity of Valenza, Italy with the remaining 20% of setting and finishing work being conducted in Bergio International’s Fairfield, New Jersey facility.  The setting and finishing work done in our New Jersey facility involves the use of precision lasers, which use soap and water rather than soldering.  Also a standard polishing compound is used for the finishing work but it does not have a material impact on our cost and effect of compliance with environmental laws.

Government Regulation

Currently, we are subject to all of the government regulations that regulate businesses generally such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning workplace safety, labor relations, and disadvantaged businesses.   In addition, our operations are affected by federal and state laws relating to marketing practices in the retail jewelry industry. We are subject to the jurisdiction of federal, various state and other taxing authorities.  From time to time, these taxing authorities review or audit our business.

Description of Property

Currently, we have a 1,730 square feet design and manufacturing facility located in Fairfield, New Jersey, which is currently being leased until August 31, 2010.  We also rent office space at this facility.  We pay approximately $2,200 per month.  Since a majority of the manufacturing is conducted by sub-contractors in Italy, the current space is presently adequate for the performance of all company functions, which includes minimal manufacturing, design and administrative needs.

Additionally, we anticipate opening additional offices and/or design facilities in other locations as we continue to implement our business plan throughout the United States, when and if any acquisitions are completed in the future.  At the current time, our expansion plans are in the preliminary stages with no formal negotiations being conducted.  Most likely no expansions will take place until additional revenues can be achieved or additional capital can be raised to help offset the costs associated with any expansion.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. To the extent that any statements made in this Report contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “may,” “anticipates,” believes,” “should,” “intends,” “estimates,” and other words of similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties are outlined in “Risk Factors” and include, without limitation:

§  
Our limited and unprofitable operating history;
§  
the ability to raise additional capital to finance our activities;
§  
legal and regulatory risks associated with the Acquisition;
§  
the future trading of our common stock;
§  
our ability to operate as a public company;
§  
general economic and business conditions;
§  
the volatility of our operating results and financial condition; and
§  
our ability to attract or retain qualified senior scientific and management personnel.

 
 
 
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The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Current Report on Form 8-K.

Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements.

Management’s Discussion and Analysis or Plan of Operation

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS CURRENT REPORT ON FORM 8-K.

The following discussion reflects our plan of operation. This discussion should be read in conjunction with the audited financial statements of DII for the years ended December 31, 2008 and 2007, and the interim period ended June 30, 2009. This discussion contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial position, business and financing plans. These statements involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Current Report on Form 8-K, particularly under the headings “Forward Looking Statements” and “Risk Factors.”

Overview

Since 1995 we have been engaged in the design and manufacture of upscale jewelry through its trade name of “Bergio” and in 2002 launched its “Bergio Bridal Collection”.  We sell to approximately 150 independent jewelry retailers across the United States and have incurred a significant amount of capital resources in creating brand recognition in the jewelry industry.

 
 
 
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Overview of Our Current Operations

Our products consist of a wide range of unique styles and designs made from precious metals such as, gold, platinum, and Karat gold, as well as diamonds and other precious stones.  We have approximately 50 to 75 product styles in our inventory, with prices ranging from $400 to $200,000.  Additionally, we have manufacturing control over our line as a result of having a manufacturing facility in New Jersey as well as subcontracts with facilities in Italy and Bangkok.

It is our intention to establish the Company as a holding company for the purpose of acquiring established jewelry design and manufacturing firms who possess branded product lines.  Branded product lines are products and/or collections whereby the jewelry manufacturers have established their products within the industry through advertising in consumer and trade magazines as well as possibly obtaining federally registered trademarks of their products and collections.  This is in line with our strategy and belief that a brand name can create an association with innovation, design and quality which helps add value to the individual products as well as facilitate the introduction of new products.

We intend to acquire design and manufacturing firms throughout the United States and Europe.  If and when we pursue any potential acquisition candidates, we intend to target the top 10% of the world’s jewelry manufactures that have already created an identity and brand in the jewelry industry.  We intend to locate potential candidates through our relationships in the industry and expect to structure the acquisition through the payment of cash, which will most likely be provided from third party financing, as well as our common stock and not cash generated from our operations.  In the event we obtain financing from third parties for any potential acquisitions; we may agree to issue our common stock in exchange for the capital received.  However, as of the date of this Current Report we do not have any binding agreements with any potential acquisition candidates or arrangements with any third parties for financing.

 Our management believes that the jewelry industry competes in the global marketplace and therefore must be adaptable to ensure a competitive measure.  Recently the U.S. economy has encountered a slowdown and we anticipate the U.S. economy will most likely remain weak at least through all of 2009.  Consumer spending for discretionary goods such as jewelry is sensitive to changes in consumer confidence and ultimately consumer confidence is affected by general business considerations in the U.S. economy.  Consumer spending for discretionary spending generally decline during times of falling consumer confidence, which may affect our retail sale of our products.  U.S. consumer confidence reflected these slowing conditions during the last quarter of 2007 and has been carried forward throughout the year of 2008.  Therefore, we intend to make strong efforts to maintain our brand in the industry through our focus on the innovation and design of its products as well as being able to consolidate and increase cost efficiency when possible through acquisitions.

Results of Operations

Result of Operations for the Years Ended December 31, 2008 and 2007

The following income and operating expenses tables summarize selected items from the statement of operations for the year ended December 31, 2008 compared to the year ended December 31, 2007.

 
 
 
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INCOME:

   
Years Ended December 31,
 
   
2008
   
2007
 
             
Sales
  $ 1,385,620     $ 1,296,585  
                 
Cost of Sales
    847,976       1,226,561  
                 
Gross Profit
  $ 537,644     $ 70,024  
                 
Gross Profit Percentage of Revenue
    39 %     5 %
 
 
Sales

Sales for the year ended December 31, 2008 were $1,385,620 compared to $1,296,585 for the year ended December 31, 2007.  This resulted in an increase of $89,035 or 7% from the comparable period of 2008 to 2007.  We experienced a moderate increase in sales during the year ended December 31, 2008 as compared to the comparable period of 2007.

Typically, revenues experience significant seasonal volatility in the jewelry industry.  The first two quarters of any given year typically represent approximately 15%-25% of total year revenues, based on historic results.  The holiday buying season during the last two quarters of every year typically account for the remainder of annual sales.

Cost of Sales

Cost of sales for the year ended December 31, 2008 was $847,976 a decrease of $378,585, or 31%, from $1,226,561 for the year ended December 31, 2007.  Our cost of sales were significantly higher for the year ended December 31, 2007 due to a write-down of approximately $284,000 of inventory to the lower of cost or market value, which we experienced during the six months ended June 30, 2007.  The inventory write-down was a result of the refinement of cost and quantity of on hand data attributable to the conversion of the Company’s books and records to new accounting software in the beginning of 2007.  We did not record any inventory write-down for the year ended December 31, 2008 and believe the cost of sales expenses are more reflective of what we expect our cost of sales to be going forward.

Gross Profit:

During the year ended December 31, 2008, we experienced a gross profit as a percentage of revenue of 39%, compared to a gross profit as a percentage of revenue of 5% for the year ended December 31, 2007.  Our increased gross profit during the year of 2008 was a result of selling lower commodity priced products at higher margins.  Also, the inventory write-down mentioned as part of cost of sales added approximately $284,000 to our 2007 cost of sales.  Without the inventory write-down in 2007, our pro-forma gross profit percent in 2007 would have been approximately 27%.
 
 
 
 
 
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OPERATING EXPENSES:

 
Years Ended December 31,
 
Increase/
 
2008
 
2007
 
(Decrease)
           
Selling Expenses
$    368,664
 
$    392,793
 
(6%)
           
Total General and Administrative Expenses
1,262,623
 
1,095,549
 
15%
           
Total Operating Expenses
$1,631,287
 
$1,488,342
 
10%
           
Net Loss
$(1,106,856)
 
$(1,171,980)
 
(6%)

Selling Expenses

Total selling expenses were $368,664 for the year ended December 31, 2008, which was approximately a 6% decrease from $392,793 for the year ended December 31, 2007.  Selling expenses include advertising, trade show expenses and selling commissions.  The decrease in selling expenses during the year ended December 31, 2008 compared to the year ended December 31, 2007 was a result of decreased advertising and travel expenses under the Company’s cost saving programs implemented in 2008.

General and Administrative Expenses

General and administrative expenses were $1,262,623 for the year ended December 31, 2008 versus $1,095,549 for the year ended December 31, 2007.  The increase in general and administrative expenses in 2008 is due primarily to an increase in professional fees due to being a publicly-traded company.  Included within professional fees in 2008 is a noncash charge related to stock-based compensation of $450,000. Also included in 2008 general and administrative expenses is share-based compensation of $317,500. Total noncash stock-based compensation was $781,500 in 2008 compared to $181,000 in 2007. The $600,500 increase in stock-based compensation was primarily offset by decreases in payroll and payroll taxes from staff reductions.

Loss from Operations

During the year ended December 31, 2008, we had a loss from operations totaling $1,093,643 which was a decrease from $1,418,318 for the same period in 2007, or approximately 23%.  The primary contributing factor of our lower loss from operations is higher gross margins on slightly higher sales.

Other Expense / Income

Other Expense / Income is comprised primarily of interest incurred on bank lines of credit, corporate credit cards, term loans and capital leases in connection with operations related to manufacturing and indirect operating expenses offset by miscellaneous income.  We attribute the increase in our other expense / income during the year ended December 31, 2008 when compared to the year ended December 31, 2007 as a result of a reduction of interest expense of $17,603 offset by recognizing sales of gold scrap in 2007. Interest expense in 2008 primarily decreased due to lower interest rates on credit lines and credit cards.  There were no sales of gold scrap occurring in 2008.

 
 
 
14

 
 
 
 
Income Tax (Benefit) Provision

The Company reported an income tax benefit of $89,133 for the year ended December 31, 2008 as compared to an income tax benefit of $331,642 for the year ended December 31, 2007.  In 2008, management recorded a full valuation allowance against its deferred tax assets.

Net Loss

The Company incurred a net loss of $1,106,856 for the year ended December 31, 2008 versus a net loss of $1,171,980 for the year ended December 31, 2007.  This was a decrease of $65,124, or 6%, in our net loss for the comparable period.  Although we experienced higher general and administrative expenses for the year ended December 31, 2008, we were able to decrease our net loss when compared to same period a year ago as a result of decreasing our cost of sales and selling expenses.  Our gross margins in 2008 have significantly increased as a result of us selling lower commodity priced products at higher margins.  Additionally, in 2007 gross margins were lower due to an inventory adjustment of approximately $284,000.   Overall our net loss is primarily attributable to a significant increase in costs associated with the non-cash stock compensation.

Three and Six Months Ended June 30, 2009 and 2008

The following income and operating expenses tables summarize selected items from the statement of operations for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 and six months ended June 30, 2009 compared to the six months ended June 30, 2008.

INCOME:

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2009
   
2008
   
2009
   
2008
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
                         
Sales
  $ 263,581     $ 362,719       454,307     $ 642,883  
                                 
Cost of Sales
    181,422       167,016       361,694       302,129  
                                 
Gross Profit
  $ 82,159     $ 195,703       92,613     $ 340,754  
                                 
Gross Profit Percentage of Revenue
    31 %     54 %     20 %     53 %

 
 
 
 
15

 
 
 
 
 
Sales

Sales for the three months ended June 30, 2009 were $263,581 compared to $362,719 for the three months ended June 30, 2008.  This resulted in a decrease of $99,138 or 27% from the comparable period of 2009 to 2008.  Sales were lower due to the continuing tough economic environment. Sales for the six months ended June 30, 2009 were $454,307 compared to $642,883 for the six months ended June 30, 2008. This resulted in a decrease of $188,576 or 29% from the comparable period of 2009 to 2008. The six month decrease is primarily due to the increase in sales discounts during the first quarter of 2009 as discussed below.

Due to the unfavorable economic environment we increased our sales discounts to our customers during the three months ended March 31, 2009.  Aggregate sales discounts in the three months ended March 31, 2009 and 2008 totaled approximately $75,000 and $14,000.  During the three months ended June 30, 2009 and 2008 our sales discounts amounted to $3,000 and $0, respectively. The increased sales discounts in 2009 were to move product and increase our liquidity.  We anticipate sales discounts and gross profits to return to historical levels as soon as the economic environment begins to turnaround and sustain growth

Typically, revenues experience significant seasonal volatility in the jewelry industry.  The first two quarters of any given year typically represent approximately 15%-25% of total year revenues, based on historic results.  The holiday buying season during the last two quarters of every year typically account for the remainder of annual sales.


Cost of Sales

Cost of sales for the three months ended June 30, 2009 were $181,422 or 69% of sales compared to $167,016 or 46% of sales for the three months ended June 30, 2008.  Cost of sales for the six months ended June 30, 2009 were $361,694 or 80% of sales compared to $302,129 or 47% of sales for the six months ended June 30, 2008.

Gross Profit:

Goss profit for the three months ended June 30, 2009 were $82,159 or 31% of sales compared to $195,703 or 54% of sales for the three months ended June 30, 2008. Gross profit for the six months ended June 30, 2009 were $92,613 or 20.4% of sales compared to $340,754 or 53% of sales for the six months ended June 30, 2008.  Our decreased gross profit margin during the year of 2009 was principally due to the increased sales discounts given to our customers in the first quarter of 2009. On a pro forma basis our gross profit margins for the six months ended June 30, 2009 would be approximately 30% versus 53% without the additional sales discounts granted our customers in 2009 versus 2008.

 
 
 
16

 
 
 
 
OPERATING EXPENSES:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2009
 
2008
 
2009
 
2008
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
               
Selling Expenses
$      82,002
 
$      80,741
 
$   130,272
 
$  143,765
               
Total General and Administrative Expenses
91,788
 
324,383
 
234,547
 
796,071
               
Total Operating Expenses
$    173,790
 
$    405,124
 
364,819
 
939,836
               
Net Loss
$  (117,319)
 
$ (124,797)
 
$ (318,775)
 
$ (485,516)

Selling Expenses

Total selling expenses for the three months ended June 30, 2009 were $82,002 compared to $80,741 for the three months ended June 30, 2008. This resulted in an increase of $1,261, or 2%, from the comparable period of 2009 to 2008. Total selling expenses for the six months ended June 30, 2009 were $130,272 compared to $143,765 for the six months ended June 30, 2008. This resulted in a decrease of $13,493, or 9%, from the comparable period of 2009 to 2008. Selling expenses have remained relatively flat for the three and six months ended June 30, 2009 compared to 2008 principally due to certain cost containment efforts implemented in 2009.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2009 were $91,788 compared to $324,383 for the three months ended June 30, 2008 or a decrease of $232,595. 2008. The decrease in general and administrative expenses in 2009 is due primarily to a decrease in non-cash charges related to stock-based compensation of approximately $177,000.

General and administrative expenses for the six months ended June 30, 2009 were $234,547 compared to $796,071 for the six months ended June 30, 2008. This resulted in a decrease of $561,524 from the comparable period of 2009 to 2008. The decrease in general and administrative expenses in 2009 is due primarily to (i) a decrease in non-cash charges related to Share-Based compensation of approximately $464,000 and (ii) the implementation of certain cost containment efforts implemented in 2009 in conjunction with lower sales.

Loss from Operations

Loss from operations for the three months ended June 30, 2009 were $91,631 compared to $209,241 for the three months ended June 30, 2008. This resulted in a decrease of $117,610, or 56%, from the comparable period of 2009 to 2008. Loss from operations for the six months ended June 30, 2009 were $272,206 compared to $599,082 for the six months ended June 30, 2008. This resulted in a decrease of $326,876, or 55%, from the comparable period of 2009 to 2008.

Other Income  (Expense)

Other Income (Expense) for the three months ended June 30, 2009 were ($24,128) compared to ($22,274) for the three months ended June 30, 2008. This resulted in an increase of ($1,854) in 2009 as compared to the same period in 2008.  Other Income (Expense) for the six months ended June 30, 2009 were $44,489 compared to $54,880 for the six months ended June 30, 2008 or a decrease of $10,391 in 2009 as compared to the same period in 2008.  
 
 
 
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Other Income (Expense) is comprised primarily of interest incurred on bank lines of credit, corporate credit cards, term loans and capital leases in connection with operations related to manufacturing and indirect operating expenses offset by miscellaneous income.  We attribute the decrease in our other (expense) / income during the six months ended June 30, 2009 when compared to the six months ended June 30, 2008 as a result of a reduction in interest expense of approximately $10,000. Interest expense in 2009 primarily decreased due to lower interest rates on lines of credit and credit cards.

Income Tax Provision (Benefit)

We reported an income tax provision of $1,560 for the three months ended June 30, 2009 as compared to an income tax benefit of $106,898 for the three months ended June 30, 2008.  We reported an income tax provision of $2,080 for the six months ended June 30, 2009 as compared to an income tax benefit of $168,446 for the six months ended June 30, 2008. In 2009, we chose to record a full valuation allowance against our deferred tax assets during the fourth quarter of 2008 as we believe it is not more likely than not, they will not be utilized.

Net Loss

Net loss for the three months ended June 30, 2009 was $117,319 compared to $124,797 for the three months ended June 30, 2008. This resulted in a decrease of $7,478, or 6%, from the comparable period of 2009 to 2008. Net loss for the six months ended June 30, 2009 was $318,775 compared to $485,516 for the six months ended June 30, 2008. This resulted in a decrease of $166,741, or 34%, from the comparable period of 2009 to 2008.


Liquidity and Capital Resources

The following table summarizes working capital at June 30, 2009 compared to December 31, 2008.

 
June 30, 2009
December 31, 2008
Increase / (Decrease)
$
       
Current Assets
$ 1,791,284 
$ 2,079,321
$(288,037)
       
Current Liabilities
1,962,091 
1,996,988 
   (34,897)
       
Working Capital
$  (170,807)
$     82,333 
$(253,140)

As of June 30, 2009, we had a cash overdraft of $26,925, compared to a cash overdraft of $7,345 at December 31, 2008.  It is anticipated that we will need to sell additional equity or debt securities or obtain credit facilities from financial institutions to meet our long-term liquidity and capital requirements, which include strategic growth through mergers and acquisitions.  There is no assurance that we will be able to obtain additional capital or financing in amounts or on terms acceptable to us, if at all or on a timely basis.
 
 
 
 
 
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Accounts receivable at June 30, 2009 was $329,549 and $713,194 at December 31, 2008, representing a decrease of $383,645 or 54%.  We typically offer our customers 60, 90 or 120 day payment terms on sales, depending upon the product mix purchased.  When setting terms with our customers, we also consider the term of the relationship with individual customers and management’s assessed credit risk of the respective customer, and may at management’s discretion, increase or decrease payment terms based on those considerations.

Inventory at June 30, 2009 was $1,458,836 and $1,326,989 at December 31, 2008. Our management seeks to maintain a very consistent inventory level that it believes is commensurate with current market conditions and manufacturing requirements related to anticipated sales volume.  We historically have not have an inventory reserve for slow moving or obsolete products due to the nature of our inventory of precious metals and stones.  This allows us to resell or recast these materials into new products and/or designs as the market changes.

Accounts payable and accrued expenses at June 30, 2009 were $434,144 compared to $446,892 at December 31, 2008, which represents a 3% decrease or $12,748 movement.

Bank Lines of Credit and Notes Payable

Our indebtedness is comprised of various bank credit lines, term loans, capital leases and credit cards intended to provide capital for the ongoing manufacturing of our jewelry line, in advance of receipt of the payment from our retail distributors.  As of June 30, 2009, we had two outstanding term loans.  One of the loans is a $300,000 term loan with JPMorgan Chase, which is payable in monthly installments and matures in May 2011.  The note bears an annual interest rate of 7.60% and as of June 30, 2009 there was an outstanding balance of $127,518.  We also have a $100,000 term loan with Leaf Financial Corporation, which is payable in monthly installments and matures in December 2013.  The note bears an annual interest rate of 9.47% and as of June 30, 2009 there was an outstanding balance of $91,359.  Both of these notes are collateralized by our assets as well as a personal guarantee by our CEO, Berge Abajian.

In addition to the notes payable, we utilize bank lines of credit to support working capital needs.  As of June 30, 2009, we had two lines of credit.  One bank line of credit is for $700,000 with Columbia Bank and requires minimum monthly payment of interest only.  The interest is calculated at the bank’s prime rate plus 0.75%.  As of June 30, 2009, we had an outstanding balance of $699,999 at an effective annual interest rate of 4.00%.  Additionally, we have a bank line of credit of $55,000 with JPMorgan Chase Bank, which also requires a monthly payment of interest only.  The interest rate is calculated at the bank’s prime rate plus 0.75%.  As of June 30, 2009, we had an outstanding balance of $44,844 at an effective annual interest rate of 4.00%.  Each credit line renews annually and is collateralized by our assets as well as a personal guarantee by our CEO, Berge Abajian.  The Company is in negotiations with the bank to renew the terms of the credit line and is waiting on funding from other sources .
 
 
 
 
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In addition to the bank lines of credit and term loans, we have a number of various unsecured credit cards.  These credit cards require minimal monthly payments of interest only and as of June 30, 2009 have interest rates ranging from 3.99% to 24.90%.  As of June 30, 2009, we have outstanding balances of $178,015.

Satisfaction of our cash obligations for the next 12 months.

For the six months ended June 30, 2009 and the six months ended June 30, 2008, we have incurred net losses of approximately $319,000  and $486,000  respectively. We have funded our working capital needs primarily from revenues, a private placement equity offering and advances from our CEO and principal stockholder. Our plan is to acquire design and manufacturing companies throughout the United States and Europe. If and when we pursue any potential business acquisitions, we intend to target the top 10% of the world’s jewelry manufacturers that have already created an identity and brand in the jewelry business. We plan to fund these potential business acquisitions from additional equity and/or debt financing, and joint venture partnerships.  However, we have no binding agreements or understandings with any potential acquisition targets. There is no assurance that we will be able to obtain additional capital in the amount or, on terms acceptable to us, in the required timeframe.

A critical component of our operating plan impacting our continued existence is to efficiently manage the production of our jewelry lines and successfully develop new lines through our Company or through possible acquisitions and/or mergers. Our ability to obtain capital through additional equity and/or debt financing, and joint venture partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the planned future growth of our operations.

Over the next twelve months we believe we have the required working capital needs to fund our current operations through revenues.  However, any expansion or future business acquisitions will require us to raise capital through an equity offering.

Summary of product and research and development that we will perform for the term of our plan.

We are not anticipating significant research and development expenditures in the near future.

Expected purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

Significant changes in the number of employees.

As previously mentioned, we currently have 3 full-time employees and 2 part-time employees.  We do not anticipate a significant change in the number of full time employees over the next 12 months.  None of our employees are subject to any collective bargaining agreements.
 
 
 
 
20

 
 

 
Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results or operations, liquidity, capital expenditures or capital resources that is deemed material.

Critical Accounting Policies

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported period.

Accounts Receivable.   Management periodically performs a detailed review of amounts due from customers to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances.  Management has provided an allowance for doubtful accounts of approximately $86,000 at June 30, 2009 and $80,000 at December 31, 2008.

Long-Lived Assets.   In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived tangible assets subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of undiscounted future cash flows.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved.

Revenue Recognition. The Company’s management recognizes revenue when realized or realizable and earned.  In connection with revenue recorded, the Company establishes a sales returns and allowances reserve for anticipated merchandise to be returned.  The estimated percentage of sales to be returned is based on the Company’s historical experience of returned merchandise. Also, management calculates an estimated gross profit margin on returned merchandise deriving a cost for the anticipated returned merchandise also based on the Company’s historical operations.

The Company’s sole revenue producing activity as a manufacturer and distributor of upscale jewelry is affected by movement in fashion trends and customer desire for new designs, varying economic conditions affecting consumer spending and changing product demand by retailers affecting their desired inventory levels.

Therefore, management’s estimation process for merchandise returns can result in actual amounts differing from those estimates.  This estimation process is susceptible to variation and uncertainty due to the challenges faced by management to comprehensively discern all conditions affecting future merchandise returns whether prompted by fashion, the economy or customer relationships.  Ultimately, management believes historical factors provide the best indicator of future conditions based on the Company’s responsiveness to changes in fashion trends, the cyclical nature of the economy in conjunction with the number of years in business and consistency and longevity of its customer mix.
 
 
 
 
21

 


RISK FACTORS

The following are certain identifiable risk factors for Bergio International’s business operations.  Risk factors related to our former business operations have been excluded but can be found in prior filings with the Securities and Exchange Commission.

Risks Relating with Our Business and Marketplace
 
Because we will need additional capital in the future to finance our operations or any future acquisitions, the inability to raise capital may result in our inability to fund our working capital requirements and ultimately harm our operational results.
 
We have and expect to continue to have substantial capital expenditure and working capital needs. For the three months ended June 30, 2009, we had sales of 263,581 and a net loss of $117,319.  For the years ended December 31, 2008 and 2007, we had sales of $1,386,000 and $1,297,000, respectively and net loss of $1,107,000 and $1,172,000, respectively. While management believes that our financial policies have been prudent, we will be reliant on future potential equity and/or debt raises to expand our current business and assist in any future acquisitions, if and when those opportunities occur.
 
There can be no assurance that we will be successful in continuing to meet our cash requirements from existing operations, or in raising a sufficient amount of additional capital in future finance offerings.  Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited.
 
A decline in discretionary consumer spending may adversely affect our industry, our operations, and ultimately our profitability.
 
Luxury products, such as fine jewelry, are discretionary purchases for consumers.  Any reduction in consumer discretionary spending or disposable income may affect the jewelry industry more significantly than other industries.  Many economic factors outside of our control could affect consumer discretionary spending, including the financial markets, consumer credit availability, prevailing interest rates, energy costs, employment levels, salary levels, and tax rates.  Any reduction in discretionary consumer spending could materially adversely affect our business and financial condition.
 
Because we are highly dependent on our key executive officers for the success of our business plan and may be dependent on the efforts and relationships of the principals of future acquisitions and mergers, if any of these individuals become unable to continue in their role, our business could be adversely affected.
 
 
 
 
22

 
 
 
We believe our success will depend, to a significant extent, on the efforts and abilities of Berge Abajian, our CEO.  If we lost Mr. Abajian, we would be forced to expend significant time and money in the pursuit of a replacement, which would result in both a delay in the implementation of our business plan and the diversion of limited working capital. We can give you no assurance that we could find a satisfactory replacement for Mr. Abajian at all, or on terms that are not unduly expensive or burdensome.
 
If we grow and implement our business plan, we will need to add managerial talent to support our business plan.  There is no guarantee that we will be successful in adding such managerial talent.  These professionals are regularly recruited by other companies and may choose to change companies.  Given our relatively small size compared to some of our competitors, the performance of our business may be more adversely affected than our competitors would be if we lose well-performing employees and are unable to attract new ones.
 
Because we intend to acquire businesses and such activity involves a number of risks, our core business may suffer.
 
We may consider acquisitions of assets or other business. Any acquisition involves a number of risks that could fail to meet our expectations and adversely affect our profitability. For example:
 
§  
The acquired assets or business may not achieve expected results;
 
§  
We may incur substantial, unanticipated costs, delays or other operational or financial problems when integrating the acquired assets;
 
§  
We may not be able to retain key personnel of an acquired business;
 
§  
Our management’s attention may be diverted; or
 
§  
Our management may not be able to manage the acquired assets or combined entity effectively or to make acquisitions and grow our business internally at the same time.
 
If these problems arise we may not realize the expected benefits of an acquisition.
 
Because the jewelry industry in general is affected by fluctuations in the prices of precious metals and precious and semi-precious stones, we could experience increased operating costs that will affect our bottom line.
 
The availability and prices of gold, diamonds, and other precious metals and precious and semi-precious stones may be influenced by cartels, political instability in exporting countries and inflation.  Shortages of these materials or sharp changes in their prices could have a material adverse effect on our results of operations or financial condition.  A significant change in prices of key commodities, including gold, could adversely affect our business or reduce operating margins and impact consumer demand if retail prices increased significantly, even though we historically incorporate any increases in the purchase of raw materials to our consumers.  Additionally, a significant disruption in our supply of gold or other commodities could decrease the production and shipping levels of our products, which may materially increase our operating costs and ultimately affect our profit margins.
 
 
 
23

 
 
 
Because we depend on our ability to identify and respond to fashion trends, if we misjudge these trends, our ability to maintain and gain market share will be effected.
 
The jewelry industry is subject to rapidly changing fashion trends and shifting consumer demands.  Accordingly, our success may depend on the priority that our target customers place on fashion and our ability to anticipate, identify, and capitalize upon emerging fashion trends.  If we misjudges fashion trends or are unable to adjust our products in a timely manner, our net sales may decline or fail to meet expectations and any excess inventory may be sold at lower prices.
 
Our ability to maintain or increase our revenues could be harmed if we are unable to strengthen and maintain our brand image.
 
We have spent significant amounts in branding our Bergio and Bergio Bridal lines.  We believe that primary factors in determining customer buying decisions, especially in the jewelry industry, are determined by price, confidence in the merchandise and quality associated with a brand.  The ability to differentiate products from competitors of Diamond has been a factor in attracting consumers.  However, if Diamond’s ability to promote its brand fails to garner brand recognition, its ability to generate revenues may suffer.  If Diamond fails to differentiate its products, its ability to sell its products wholesale will be adversely affected.  These factors could result in lower selling prices and sales volumes, which could adversely affect its financial condition and results of operations.
 
We maintain a relatively large inventory of our raw materials and if this inventory is lost due to theft, our results of operations would be negatively impacted.
 
We purchase large volumes of precious metals and store significant quantities of raw materials and jewelry products at our facility in New Jersey.  Although we have an insurance policy with Lloyd’s of London, if we were to encounter significant inventory losses due to third party or employee theft from our facility which required us to implement additional security measures, this would increase our operating costs.  Also such losses of inventory could exceed the limits of, or be subject to an exclusion from, coverage under our current insurance policy.  Claims filed by us under our insurance policies could lead to increases in the insurance premiums payable by us or possible termination of coverage under the relevant policy.
 
If we were to experience substantial defaults by our customers on accounts receivable, this could have a material adverse affect on our liquidity and results of operations.
 
A significant portion of our working capital consists of accounts receivable from customers.  If customers responsible for a large amount of accounts receivable were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be materially adversely affected.  An economic or industry downturn could materially affect the ability to collect these accounts receivable, which could then result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations.  A significant deterioration in the ability to collect on accounts receivable could affect our cash flow and working capital position.
 
 
 
 
24

 
 
 
 
Risks Relating to our Common Stock
 
If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
 
Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, the Financial Industry Regulatory Authority (“FINRA”) has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Pursuant to Rule 6530(e), if we file our reports late with the Commission three times our securities will be removed from the OTC Bulletin Board for failure to timely file.  As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
 
Because our common stock could be deemed a low-priced “Penny” stock, it would be cumbersome for brokers and dealers to trade in our common stock, making the market for our common stock less liquid and negatively affect the price of our stock.
 
We may be subject to certain provisions of the Securities Exchange act of 1934, commonly referred to as the “penny stock” as defined in Rule 3a51-1.  A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.  If our stock is deemed to be a penny stock, trading will be subject to additional sales practice requirements of broker-dealers.  These require a broker-dealer to:
 
§  
Deliver to the customer, and obtain a written receipt for, a disclosure document;
 
§  
Disclose certain price information about the stock;
 
§  
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
 
§  
Send monthly statements to customers with market and price information about the penny stock; and
 
§  
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.
 
Consequently, penny stock rules may restrict the ability or willingness of broker-dealers to trade and/or maintain a market in our common stock.  Also, prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.
 
 
 
25

 
 
 
FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
Because our current chief executive officer and sole director, Mr. Berge Abajian, owns a significant percentage of our company, he will be able to exercise significant influence over our company, despite your ability to vote.
 
Berge Abajian, our chief executive officer and sole director, beneficially owns a majority of our common stock.  Accordingly, Mr. Abajian will be able to determine the composition of our board of directors, will retain the effective voting power to approve all matters requiring shareholder approval, will prevail in matters requiring shareholder approval, including, in particular the election and removal of directors, and will continue to have significant influence over our business.  As a result of his ownership and position in the Company, Mr. Abajian is able to influence all matters requiring shareholder action, including significant corporate transactions.  In addition, sales of significant amount of shares held by Mr. Abajian, or the prospect of these sales, could adversely affect the market price of our common stock.

Di r ectors and Executiv e Officers

The following table sets forth information regarding the members of our board of directors and our executive officers and other significant employees. All of our officers and directors were appointed on the effective date of the Acquisition. All of our directors hold office until the next annual meeting of stockholders and their successors are duly elected and qualify. Executive officers serve at the request of the board of directors.

Name
Age
Office(s) Held
Berge Abajian
48
President, Chief Executive Officer and Director

Set forth below is a brief description of the background and business experience of our current executive officers and directors.

Berge Abajian comes from a family background in jewelry manufacturing.  The Abajian family started manufacturing jewelry in the 1930’s and Berge entered into the industry as a manufacturer in 1980.    From 1980 to 1983, Mr. Abajian served as the Secretary and Treasurer of Pyramid Jewelry, a jewelry manufacturing company.  Mr. Abajian established operations of Diamond Information Institute in 1995 and started his “Bergio” brand label over ten years ago.  Currently, Mr. Abajian is the chief executive officer, president and sole director of Diamond.  The Bergio line was one of the first to introduce yellow diamonds in jewelry and has continued to be on the cutting edge of jewelry trends.  In 2002, Mr. Abajian also began production of his Bergio Bridal Collection.  Mr. Abajian has a BS in Business Administration from Fairleigh Dickinson University and is well known and respected in the jewelry industry.  Since 2005, Mr. Abajian has served as the President of the East Coast branch of the Armenian Jewelry Association and has also served as a Board Member on MJSA (Manufacturing Jewelers and Suppliers of America), New York Jewelry Association, and the 2001-2002 Luxury Show.

 
 
 
26

 
 
 
 
Directors

We currently have one director.  Immediately prior to the effective time of the Acquisition, Owen Gibson resigned as our sole officer and director. Pursuant to the terms of the Exchange Agreement, Berge Abajian, who prior to the Acquisition was the director of DII, was appointed as our director.

All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected by the board of directors and serve at the discretion of the board.

There are no family relationships among our directors and executive officers.

Meetings of Our Board of Directors

Our board of directors did not hold any meetings during the most recently completed fiscal year end. Various matters were approved by consent resolution, which in each case was signed by each of the members of the Board then serving.

Committees of the Board

We do not currently have a compensation committee, executive committee, or stock plan committee.

Audit Committee

We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

 
 
 
27

 
 
 
 
Nomination Committee

Our Board of Directors does not maintain a nominating committee. As a result, no written charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating committee.

When evaluating director nominees, our directors consider the following factors:

·  
The appropriate size of our Board of Directors;
·  
Our needs with respect to the particular talents and experience of our directors;
·  
The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
·  
Experience in political affairs;
·  
Experience with accounting rules and practices; and
·  
The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members.

Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not typically consider shareholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our best interests.

E xecutive Compensation

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to both to our officers and to our directors for all services rendered in all capacities to us for our fiscal years ended December 31, 2008 and 2007.

Name and Principal Position
Year
Ended December 31,
Salary
Stock
Awards (1)
All Other Compensation
Total
Berge Abajian
         
Chief Executive Officer, President, Principal Accounting Officer
2007
2008
$63,108
$6,242
$50,000
$50,000
$-0-
$25,496 (2)
$113,108
$81,738
           
Owen Gibson
         
Former Chief Executive Officer, President, Principal Accounting Officer
2007
2008
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
(1)  
The amounts shown in this column reflect the expense recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008 and 2007, in accordance with FAS 123(R).
(2)  
Other compensation was made up of Mr. Abajian’s car expense and health insurance expenses.  Included in
this amount was approximately $8,670 for Ms. Abajian’s health insurance expenses.

 
 
 
 
 
28

 
 
Stock Option Grants

We have not granted any stock options to the executive officers or directors since our inception.

Director Compensation and Other Arrangements

Name and Principal Position
Fees Earned or Paid in Cash
Stock
Awards (1)
All Other Compensation
Total
Berge Abajian, Sole Director
$-0-
$50,000
$-0-
$50,000
Owen Gibson
$-0-
$-0-
$-0-
$-0-

Mr. Abajian was issued 100,000 shares of common stock as compensation for serving on DII's Board of Directors for the 2007 and 2008 fiscal years.  On February 11, 2009, Mr. Abajian was issued another 50,000 shares of common stock as compensation in advance for serving on DII's Board of Directors for the upcoming 2009 fiscal year.  None of the shares owned by Mr. Abajian have any registration rights attached to them.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to us with respect to the beneficial ownership of our Common Stock following the events described in Item 1.01 of this Current Report by (1) all persons who are beneficial owners of 5% or more of our voting securities, (2) each director, (3) each executive officer, and (4) all directors and executive officers as a group. The information regarding beneficial ownership of our common stock has been presented in accordance with the rules of the Securities and Exchange Commission. Under these rules, a person may be deemed to beneficially own any shares of capital stock as to which such person, directly or indirectly, has or shares voting power or investment power, and to beneficially own any shares of our capital stock as to which such person has the right to acquire voting or investment power within 60 days through the exercise of any stock option or other right. The percentage of beneficial ownership as to any person as of a particular date is calculated by dividing (a) (i) the number of shares beneficially owned by such person plus (ii) the number of shares as to which such person has the right to acquire voting or investment power within 60 days by (b) the total number of shares outstanding as of such date, plus any shares that such person has the right to acquire from us within 60 days. Including those shares in the tables does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.

Except as otherwise indicated, all Shares are owned directly and the percentage shown is based on 4,308,625 Shares of Common Stock issued and outstanding as of the effective date of the Acquisition. Addresses for all of the individuals listed in the table below are c/o Bergio International, 12 Daniel Road East Fairfield, New Jersey 07004.

Title of class
Name and address
of beneficial owner (1)
Amount of
beneficial
ownership
Percent
of class (2)
Current Executive Officers & Directors:
Common
Berge Abajian
2,221,225 Shares
51.5%
Total of All Current Directors and Officers:
2,221,225 Shares
51.5%
More than 5% Beneficial Owners
Common
     

(1)
Includes shares held directly with sole voting and investment power, unless otherwise
indicated.
(2)
Includes shares subject to stock options and warrants that are held by the individual and
exercisable within 60 days.

 
Certain Relationships and Related Transactions

With the exception of the Acquisition and the agreements discussed herein, none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction over the last two years or in any presently proposed transaction which, in either case, has or will materially affect us.

Description of Securities

 
Common Stock
 
We have 65,000,000 common shares with a par value of $0.001 per share of common stock authorized, of which 4,308,625   shares were outstanding after the events description in Item 1.01 above.
 
 
 
29

 
 
 
 
Voting Rights
 
Holders of common stock have the right to cast one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including the election of directors.  There is no right to cumulative voting in the election of directors.  Except where a greater requirement is provided by statute or by the Articles of Incorporation, or by the Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of a majority of the outstanding shares of the our common voting stock shall constitute a quorum for the transaction of business. The vote by the holders of a majority of such outstanding shares is also required to effect certain fundamental corporate changes such as liquidation, merger or amendment of the Company's Articles of Incorporation.
 
Dividends
 
There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Delaware General Corporation Law (the “DGCL”) provides that a corporation may pay dividends out of surplus, out the corporation's net profits for the preceding fiscal year, or both provided that there remains in the stated capital account an amount equal to the par value represented by all shares of the corporation's stock raving a distribution preference.
 
We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.
 
Pre-emptive Rights
 
Holders of common stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of common stock are, and the shares of common stock offered hereby will be when issued, fully paid and non-assessable.
 
Share Purchase Warrants
 
We have not issued and do not have outstanding any warrants to purchase shares of our common stock.
 
Options
 
We have not issued and do not have outstanding any options to purchase shares of our common stock.
 
Convertible Securities
 
We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
 
Preferred Stock
 
We have 10,000,000 preferred shares with a par value of $0.001 per share of preferred stock authorized.  No shares of preferred stock had been issued.
 
Transfer Agent
 
Our transfer agent is Empire Stock Transfer, located at 2470 St. Rose Pkwy, Suite 304 Henderson, NV 89074.  Phone: (702) 818-5898.
 
 
 
30

 
 
Market for Our Stock

Our common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current "bids" and "asks", as well as volume information. As of the date of the Acquisition, our shares were quoted on the OTCBB under the symbol “ABMX.OB.”

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ending December 31, 2008
Quarter Ended
 
High $
 
Low $
December 31, 2008
 
0
 
0
September 30, 2008
 
0
 
0
June 30, 2008
 
0
 
0
March 31, 2008
 
0
 
0
 
Fiscal Year Ending December 31, 2007
Quarter Ended
 
High $
 
Low $
December 31, 2007
 
0
 
0
September 30, 2007
 
0
 
0
June 30, 2007
 
0
 
0
March 31, 2007
 
0
 
0


Item 3.02.                         Unregistered Sales of Equity Securities

In connection with the Acquisition, the previous shareholders of DII received 2,585,175 shares of our common stock. The 2,585,175 shares of our common stock which were issued to the former holders of common stock of DII on as of the effective date of the Acquisition were done so in reliance on the exemption from registration afforded by Section 4(2) of the Securities Act.

Item 5 .01 .                        Changes in Control of Registrant.

Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item 5.02 .                        Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

At the effective time of the Acquisition, Owen Gibson resigned as our sole director and officer. There was no known disagreement with Mr. Gibson on any matter relating to our operations, policies, or practices. Pursuant to the terms of the Exchange Agreement, our new director and officer is as set forth herein. Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference. Pursuant to the terms of the Exchange Agreement, Berge Abajian, who prior to the Acquisition was the director of DII, was appointed as our sole officer and director.

 
 
31

 
 
 
Item 9.01 .                        Financial Statements and Exhibits

Financial Statements of Businesses Acquired .   In accordance with Item 9.01(a), the audited financial statements of our predecessor DII, Inc., a New Jersey corporation, for the years ended December 31, 2008 and 2007, and the interim period ended June 30, 2009 are filed in this Current Report on Form 8-K as Exhibit 99.1.

Pro Forma Financial Information . In accordance with Item 9.01(b), our pro forma financial statements are filed in this Current Report on Form 8-K as Exhibit 99.2.

(c)                       Exhibits.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.


Exhibit No .
Description
   
 
 
 
 
32

 
 
 
SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.







Date:  October 20, 2009
Bergio International, Inc.
   
   
 
By: /s/Berge Abajian
 
           Berge Abajian
 
           Chief Executive Officer

 
33

 

 
 

 

SHARE EXCHANGE AGREEMENT
 
by and between
 
ALBA MINERAL EXPLORATION, INC.
 
and
 
DIAMOND INFORMATION INSTITUTE, INC.
 
October 19, 2009
 

 
 
 

 

 


TABLE OF CONTENTS
 
Page
 
 
ARTICLE I DEFINITIONS   
 
Section 1.1
Definitions
1
 
ARTICLE II SALE AND TRANSFER OF ASSETS
 
Section 2.1
Purchase and Sale of Assets; Assumption of Liabilities .. 
6
 
Section 2.2
Effective Time
6
 
Section 2.3
Articles of Incorporation; By-laws; Directors and Officers
6
 
Section 2.4
Effects of the Asset Purchase
7
 
Section 2.5
Closing
7
 
ARTICLE III  PURCHASE PRICE  
 
Section 3.1
Issuance of Purchase Shares
8
 
Section 3.2
PurchaserCommon Stock
8
 
ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBERS  
 
Section 4.1
Organization .  . 
8
 
Section 4.2
Authorization; Validity of Agreement .  . 
8
 
Section 4.3
Consents and Approvals; No Violations
9
 
Section 4.4
Financial Statements
9
 
Section 4.5
No Undisclosed Liabilities
10
 
Section 4.6
Litigation
10
 
Section 4.7
No Default; Compliance with Applicable Laws
10
 
Section 4.8
Broker’s and Finder’s Fees
10
 
Section 4.9
Contracts
10
 
Section 4.10
Tax Returns and Audits
11
 
Section 4.11
Patents and Other Intangible Assets
11
 
Section 4.12
Employee Benefit Plans; ERISA
12
 
Section 4.13
Title to Property and Encumbrances
12
 
Section 4.14
Condition of Properties .. 
13
 
Section 4.15
Insurance Coverage .  . 
13
 
Section 4.16
Environmental Matters
13
 
Section 4.17
Disclosure
14
 
ARTICLE V  REPRESENTATIONS AND WARRANTIES OF PURCHASER.  
 
Section 5.1
Organization .  . 
14
 
Section 5.2
Authorization; Validity of Agreement
14
 
Section 5.3
Consents and Approvals; No Violations
15
 
Section 5.4
Litigation .  . 
15
 
Section 5.5
No Default; Compliance with Applicable Laws
15
 
Section 5.6
Broker’s and Finder’s Fees; Broker/Dealer Ownership .  . 
15
 
Section 5.7
Capitalization of Purchaser
15
 
Section 5.8
Validity of Shares
16
 
Section 5.9
SEC Reporting and Compliance
16
 
Section 5.10
No General Solicitation
17
 
Section 5.11
Financial Statements
17
 
Section 5.12
Absence of Undisclosed Liabilities
17
 
Section 5.13
Changes
17
 
Section 5.14
Tax Returns and Audits
18
 
Section 5.15
Employee Benefit Plans; ERISA
18
 
Section 5.16
Interested Party Transactions .  . 
19
 
Section 5.17
Questionable Payments .  . 
19
 
Section 5.18
Obligations to or by Stockholders
20
 
Section 5.19
Schedule of Assets and Contracts
20
 
Section 5.20
Environmental Matters
20
 
Section 5.21
Employees
21
 
Section 5.22
Title to Property and Encumbrances
21
 
Section 5.23
Condition of Properties
21
 
Section 5.24
Insurance Coverage
22
 
Section 5.25
Disclosure .  . 
22
 
Section 5.26
No Liabilities
22

 
ARTICLE VI  CONDUCT OF BUSINESSES PENDING THE EFFECTIVE TIME  
 
Section 6.1
Conduct of Business by the Company Pending the Effective Time
22
 
Section 6.2
Conduct of Business by Purchaser Pending the Effective Time.
22
 
ARTICLE VII  ADDITIONAL AGREEMENTS  
 
Section 7.1
Access and Information
23
 
Section 7.2
Additional Agreements
23
 
Section 7.3
Publicity
24
 
Section 7.4
Appointment of Directors
24
 
Section 7.5
Name Change
25
 
ARTICLE VIII  CONDITIONS OF PARTIES’ OBLIGATIONS  
 
Section 8.1
Company' Obligations
25
 
Section 8.2
Purchaser Obligations
26
 
ARTICLE IX  INDEMNIFICATION AND RELATED MATTERS  
 
Section 9.1
Indemnification by Purchaser
27
 
Section 9.2
Survival
28
 
Section 9.3
Time Limitations
28
 
Section 9.4
Limitation on Liability
28
 
Section 9.5
Notice of Claims
28
 
ARTICLE X  TERMINATION PRIOR TO CLOSING  
 
Section 10.1
Termination of Agreement
29
 
Section 10.2
Termination of Obligations
29
 
ARTICLE XI  MISCELLANEOUS  
 
Section 11.1
Amendments
30
 
Section 11.2
Notices
30
 
Section 11.3
Entire Agreement
30
 
Section 11.4
Expenses
30
 
Section 11.5
Severability
30
 
Section 11.6
Successors and Assigns; Assignment
31
 
Section 11.7
No Third Party Beneficiaries
31
 
Section 11.8
Counterparts; Delivery by Facsimile
31
 
Section 11.9
Waiver
31
 
Section 11.10
No Constructive Waivers
31
 
Section 11.11
Further Assurances
32
 
Section 11.12
Recitals
32
 
Section 11.13
Headings
32
 
Section 11.14
Governing Law
32
 
Section 11.15
Dispute Resolution
32
 
Section 11.16
Interpretation
32


LIST OF EXHIBITS
 
Exhibit
Description
   
Exhibit A
Articles of Incorporation of Purchaser
Exhibit B
By-laws of Purchaser
Exhibit C
Directors of Purchaser Pre-Effective Time and Post-Effective Time
   
   
 
 
 
 
 

 
 
 
SHARE EXCHANGE AGREEMENT
 
 
 
THIS SHARE EXCHANGE AGREEMENT is entered into as of October 19, 2009 by and between ALBA MINERAL EXPLORATION, INC., a Delaware corporation (“ Purchaser ”) and DIAMOND INFORMATION INSTITUTE, INC., a New Jersey Corporation (the “Company”).
 
W I T N E S S E T H :
 
WHEREAS, The Company desire to sell to Purchaser, and Purchaser desires to purchase from the Company, all of the Company’ assets for the consideration and on the terms set forth in this Agreement,
 
NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:
 
              ARTICLE I                      
DEFINITIONS
 
Section 1.1   Definitions .  Capitalized terms used in this Agreement shall have the following meanings:
 
Acquisition Proposal ” shall have the meaning given to such term in Section 6.2 hereof.
 
Action ” shall mean any claim, action, suit, proceeding, investigation or order.
 
Affiliate ” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such Person.  For the purposes of this definition, “ control ” (including, with correlative meaning, the terms “ controlling ,” “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person through the ownership of voting securities, by contract or otherwise.
 
Agreement ” shall mean this Stock Exchange Agreement, including  the exhibits attached hereto or referred to herein, as the same may be amended or modified from time to time in accordance with the provisions hereof.
 
Applicable Contract ” shall mean any Contract which relates directly or indirectly to the Assets or to services rendered to or by or to be rendered to or by any of the Company.
 
Articles of Incorporation ” shall have the meaning given to such term in Section 2.3(a) hereof.
 
Assets ” shall have the meaning given to such term in Section 2.1 hereof.
 
Balance Sheet ” shall have the meaning given to such term in Section 4.5 hereof.
 
Balance Sheet Date ” shall have the meaning given to such term in Section 4.4 hereof.
 
By-laws ” shall have the meaning given to such term in Section 2.3(b) hereof.
 
 
 
 
 

 
 
 
 
 “ Closing ” shall have the meaning given to such term in Section 2.5 hereof.
 
Closing Date ” shall have the meaning given to such term in Section 2.5 hereof.
 
Code ” shall mean the Internal Revenue Code of 1986, as amended.
 
Commission ” shall mean the United States Securities and Exchange Commission.
 
Company ” shall have the meaning given to such term in the preamble to this Agreement.
 
Company Material Adverse Effect ” shall mean any change, effect or circumstance that is materially adverse or is reasonably likely to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or operations of the Company and its subsidiaries, taken as a whole, other than any such change, effect or circumstance relating to general economic, regulatory or political conditions, except to the extent such change, effect or circumstance disproportionately affects such Company and its subsidiaries, taken as a whole.
 
 “ Contract ” shall have the meaning given to such term in Section 4.3 hereof.
 
Consents ” shall mean any permits, filings, notices, licenses, consents, authorizations, accreditation, waivers, approvals and the like of, to, with or by any Person.
 
DGCL ” shall mean the General Corporation Law of the State of Delaware.
 
Effective Time ” shall have the meaning given to such term in Section 2.2 hereof.
 
Employee Benefit Plans ” shall have the meaning assigned to it in Section 4.12 hereof.
 
Environmental Law ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq. and comparable state statutes dealing with the registration, labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., as any of the above referenced statutes have been amended as of the date hereof, all rules, regulations and policies promulgated pursuant to any of the above referenced statutes, and any other foreign, federal, state or local law, statute, ordinance, rule, regulation or policy governing environmental matters, as the same have been amended as of the date hereof.
 
ERISA ” shall mean the Employee Retirement Income Securities Act of 1974, as amended, and the regulations issued thereunder.
 
Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations issued thereunder.
 
 
 
 
 

 
 
 
 
Federal Securities Laws ” means the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder.
 
GAAP ” shall mean generally accepted accounting principles as in effect from time to time in the United States consistently applied.
 
Hazardous Material ” means any substance or material meeting any one or more of the following criteria:  (a) it is or contains a substance designated as or meeting the characteristics of a hazardous waste, hazardous substance, hazardous material, pollutant, chemical substance or mixture, contaminant or toxic substance under any Environmental Law; (b) its presence at some quantity requires investigation, notification or remediation under any Environmental Law; (c) it contains, without limiting the foregoing, asbestos, polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived substances or waste, pesticides, herbicides, crude oil or any fraction thereof, nuclear fuel, natural gas or synthetic gas; or (d) mold.
 
 “ Indebtedness ” shall mean any obligation of the Company that under GAAP is required to be shown on the Balance Sheet of the Company as a Liability. Any obligation secured by a Lien on, or payable out of the proceeds of production from, property of the Company shall be deemed to be Indebtedness even though such obligation is not assumed by the Company.
 
Indebtedness for Borrowed Money ” shall mean (a) all Indebtedness in respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of the Company, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money, or (c) all such Indebtedness guaranteed by the Company or for which the Company are otherwise contingently liable.
 
Intellectual Property ” shall have the meaning given to such term in Section 4.11(b) hereof.
 
Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.
 
Liability ” shall mean any and all liability, debt, obligation, deficiency, Tax, penalty, fine, claim, cause of action or other loss, cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due or to become due and regardless of when asserted.
 
Lien ” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.
 
 “NJSA” shall mean the New Jersey Statutes Annotated, as amended.
 
Ordinary Course of Business   shall mean an action taken by a Person will be deemed to have been taken in the “Ordinary Course of Business” only if:
 
 
 
 
 
 

 
 
 
 
(i)           such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person;
 
(ii)           such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and
 
(iii)           such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.
 
Person ” shall mean any individual, corporation, limited liability company, partnership, joint venture, trust or other entity or organization, including any government or political subdivision or an agency or instrumentality thereof.
 
Purchaser ” shall have the meaning given to such term in the preamble to this Agreement.
 
Purchaser Balance Sheet ” shall have the meaning assigned to such term in Section 5.12 hereof.
 
Purchaser Balance Sheet Date ” shall have the meaning assigned to it in Section 5.12 hereof.
 
Purchaser Common Stock ” shall mean the common stock, par value $0.001 per share, of Purchaser.
 
Purchaser Employee Benefit Plans ” shall have the meaning assigned to such term in Section 5.16 hereof.
 
Purchaser Financial Statements ” shall have the meaning assigned to such term in Section 5.11 hereof.
 
“Purchaser Material Adverse Effect ” means any change, effect or circumstance that is materially adverse or is reasonably likely to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or operations of Purchaser and its subsidiaries, taken as a whole, other than any such change, effect or circumstance relating to general economic, regulatory or political conditions, except to the extent such change, effect or circumstance disproportionately affects Purchaser and its subsidiaries, taken as a whole.
 
Purchaser SEC Documents ” shall have the meaning assigned to such term in Section 5.9 hereof.
 
Permitted Liens ” shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings; and (c) Liens incidental to the conduct of the businesses of the Company that were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use made thereof by the Company in their businesses.
 
 
 
 
 

 
 
 
 
Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations issued thereunder.
 
 “ Tax ” or “ Taxes ” shall mean (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States (federal, state or local) or other applicable jurisdiction; (b) any liability for the payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Code Section 1.1502-6; and (c) any liability for the payments of any amounts as a result of being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in either clauses (a) or (b).
 
Tax Return ” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065)) required to be supplied to a Tax authority relating to Taxes.
 
Tax Sharing Agreements ” shall have the meaning given to such term in Section 4.10 hereof.
 

 
 

 
ARTICLE II               
SALE AND TRANSFER OF ASSETS
 
Section 2.1   Purchase and Sale of Assets; Assumption of Liabilities .  Upon the terms and subject to the conditions of this Agreement, at the Effective Time, the Company shall sell, assign, convey, transfer and deliver to Purchaser, and the Purchaser shall purchase and acquire from the Company, all right, title and interest in and to all of the assets of the Company, including but not limited to all of the following assets, wherever located (collectively, the “Assets”):
 
 
(i) all rights under Applicable Contracts;
 
 
(ii) all tangible personal property owned, used or leased by the Company, including any machinery, equipment, operating supplies and other similar property, wherever located;
 
 
(iii) all inventions, copyrights, patents, trademarks, trademark applications, trade names, trade secrets, logos , including any proprietary know-how and use and application know-how, manufacturing, engineering, drawings, design and engineering specifications, production standards, practices and promotional literature and advertising and any and all other intellectual property rights, including those derived, if any, from services previously rendered to customers and the right to sue for past infringements thereof;
 
 
(iv) all software in which the Company has an interest including source and object codes, computer applications and operating programs used in connection with the business of the Company; all causes of action, judgments, claims, and demands of any nature related to such software;
 
 
(v) all customer lists, supplier lists, sales and marketing records and materials, client files and records, and other business records;
 
 
(vi) all current assets, including all cash, prepaid expenses, and all trade and other accounts and notes receivable; and
 
 
(vii) all intangible property, including goodwill and covenants not to compete.
 
Subject to the terms and conditions of this Agreement, at the Effective Time the Purchaser will assume all of the Company’s duties, liabilities and obligations (collectively, the “Assumed Obligations”), with the sole exception of those duties and liabilities listed on Schedule 2.1 (the “Excluded Obligations”).  Notwithstanding anything to the contrary above, Purchaser will not assume any liabilities or obligations of the Company if the existence of such liabilities or obligations either are, or give rise to or result from, facts or circumstances that constitute a misrepresentation or breach of the representations and warranties made in this Agreement. The Assumed Obligations are the only liabilities and obligations of the Company that Purchaser will assume in connection with this Agreement.
 
Section 2.2   Effective Time .   This Agreement shall become effective upon its execution by all parties hereto, and such time is hereinafter referred to as the “ Effective Time .”
 
Section 2.3   Articles of Incorporation; By-laws; Directors and Officers .
 
 
 
 
 

 
 
 
 
(a)   With the exception of the name change as provided herein, the Articles of Incorporation of Purchaser as in effect immediately prior to the Effective Time, a copy of which is attached as Exhibit A hereto, shall continue to be the Articles of Incorporation of Purchaser (the “ Articles of Incorporation ”) from and after the Effective Time until thereafter changed or amended as provide therein or in accordance with applicable law.
 
(b)   The by-laws of Purchaser as in effect immediately prior to the Effective Time, a copy of which is attached as Exhibit B hereto, shall continue to be the by-laws of the Purchaser (the “ By-laws ”) from and after the Effective Time until thereafter changed or amended as provided therein or in accordance with applicable law.
 
(c)   One or more of the shareholders of the Company at the Effective Time shall be appointed the directors of the Purchaser and shall hold office from the Effective Time until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and By-laws.  One or more of the shareholders of the Company immediately prior to the Effective Time shall be appointed the officers of the Purchaser and shall hold office from the Effective Time until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and By-laws.
 
(d)   At the Effective Time as contemplated by Section 2.2 hereof, the officers and directors of the Purchaser designated on Exhibit C hereto shall resign, to be replaced by the officers and directors designated on Exhibit C hereto, who shall immediately take such offices or who shall take such offices upon compliance with the Federal Securities Laws, as the case may be.  The appointment of new directors in accordance with the terms of this Section 2.3(d) shall be accomplished through the filling of vacancies in the Board of Directors of the Purchaser in compliance with the applicable provisions of the DGCL and the By-laws of the Purchaser and without the vote (by written consent or otherwise) of the shareholders of the Purchaser.
 
Section 2.4   Effects of the Asset Purchase .  At the Effective Time, except as otherwise provided herein, all of the property, rights, privileges, powers and franchises of the Company shall vest in the Purchaser, and all debts, liabilities and duties of the Company, with the exception of the Excluded Obligations, shall become the debts, liabilities and duties of the Purchaser. The Company acknowledges that, from and after the Effective Time, Purchaser shall have the absolute and unqualified right to deal with the former assets and business of the Company as its own property, without limitation on the disposition or use of such assets or the conduct of such business.
 
Section 2.5   Closing .  The consummation of the transactions contemplated by this Agreement (the “ Closing ”), shall take place: (a) at the offices of the Purchaser at 10:00 a.m. local time on the date on which all of the conditions to the Closing set forth in Article VIII hereof shall be fulfilled or waived in accordance with this Agreement (other than conditions that can be satisfied only at the Closing, but subject to the fulfillment or waiver of those conditions at the Closing); or (b) at such other place, time and date as the Company and Purchaser may agree in writing (the “ Closing Date ”).
 
 
 
 
 

 
 
                                  ARTICLE III                                
PURCHASE PRICE
 
Section 3.1   Issuance of Purchase Shares .  Immediately upon the Effective Time, the purchase price for the Assets will be paid in the form of shares of common stock from treasury, par value $0.001 per share, in the Purchaser (the “Purchase Shares”), to be issued in the proportions and amounts and to the Persons set forth on Schedule 3.1.  Each share of Company common stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) shall be converted or exchanged into the right to receive .21884 shares of Purchaser common stock. The aggregate number of Purchase Shares of common stock to be issued to the Company pursuant to this Section 3.1 shall equal 2,585,175 shares and shall represent a Sixty Percent (60%) interest in Purchaser’s common stock issued and outstanding.  The issuance of Purchase Shares to the Company shall be authorized by Board Resolution of the Purchaser prior to the Closing.
 
Section 3.2   Purchaser Common Stock .  Purchaser shall reserve a sufficient number of shares of its common stock to complete the issuance of the Purchase Shares contemplated by Sections 3.1 hereof.  Purchaser covenants and agrees that immediately prior to the Effective Time there will be 5,033,450 shares of Purchaser common stock issued and outstanding, and that no other common or preferred stock or equity securities of the Purchaser, or any options, warrants, rights or other agreements or instruments convertible, exchangeable or exercisable into common or preferred stock or equity securities of the Purchaser, shall be issued or outstanding immediately prior to the Effective Time.  At the Closing, Purchaser shall provide a Board Resolution evidencing the authorization of all newly issued shares from treasury stock.
 
Section 3.3   Delivery of Stock Certificate .  A stock certificate reflecting the number of shares of common stock outstanding and issued to be used in the purchase of the Company pursuant to the terms of Section 3.1, will be delivered by the Purchaser to the Company at the time of Closing. Purchaser shall also provide any additional stock certificates reflecting the number of shares of common stock outstanding and issued to any party not listed in Schedule 3.1.
 

                                       
                            ARTICLE IV                                
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants to Purchaser as follows:
 
Section 4.1   Organization .  The Company (i) is duly organized, validly existing and in good standing (or its equivalent) under the laws of the State of New Jersey, (ii) has all licenses, permits, authorizations and other consents necessary to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and (iii) has all requisite corporate or other applicable power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and presently proposed to be conducted, except where such failure would not have, or be reasonably likely to have, a Company Material Adverse Effect.  The Company is duly qualified or authorized to conduct business and is in good standing (or its equivalent) as a foreign corporation or other entity in all jurisdictions in which the ownership or use of its assets or nature of the business conducted by it makes such qualification or authorization necessary, except where the failure to be so duly qualified, authorized and in good standing would not have a Company Material Adverse Effect.
 
 
 
 
 

 
 
 
 
 
Section 4.2   Authorization; Validity of Agreement .  The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the board and shareholders of the Company and no other action on the part of any of the Company or any of their shareholders, or subsidiaries is necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company and (assuming due and valid authorization, execution and delivery hereof by Purchaser) is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.
 
Section 4.3   Consents and Approvals; No Violations .  Neither the execution, delivery or performance of this Agreement by the Company nor the consummation of the transactions contemplated hereby will (i) violate any provision of the Company’s certificates of organization or operating agreements; (ii) violate, conflict with or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, require the consent of or result in the creation of any encumbrance upon any of the properties of any of the Company or any of their subsidiaries under any material note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument (collectively, “ Contract ”) to which the Company or any their subsidiaries or any of their respective properties may be bound; (iii) require any Consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental entity by or with respect to the Company or any of their subsidiaries; or (iv) violate any order, writ, judgment, injunction, decree, law, statute, rule or regulation applicable to the Company or any of their subsidiaries or any of their respective properties or assets; except, in the cases of clauses (ii), (iii) and (iv), any such violations, conflicts, breaches, defaults or encumbrances, or any failure to receive any such consent, approval or authorization, or to make any such notice, declaration, filing or registration as will not result in, or could reasonably be expected to result in, a Company Material Adverse Effect.
 
Section 4.4   Financial Statements .  The Company has delivered or made available as of the date hereof or shall, prior to the Closing Date, deliver or make available to Purchaser the audited consolidated balance sheets of the Company for the fiscal year ended December 31, 2008  and an unaudited balance sheet, statement of operation, and cash flow analysis with footnotes, for the six month period ended June 30, 2009 (the “ Balance Sheet Date ”) and the related consolidated and consolidating statements of income, stockholders’ equity and cash flows of the Company for the fiscal years ended December 31, 2008 and 2007.  The foregoing financial statements (including any notes thereto) (i) have been prepared based upon the books and records of the Company, (ii) have been prepared in accordance with GAAP (except as otherwise noted therein), and (iii) present fairly, in all material respects, the financial position, results of operations and cash flows of the Company as at their respective dates and for the periods then ended.  To the knowledge of the Company, since the Balance Sheet Date, no fact or condition exists that has not been disclosed to Purchaser that has had or could reasonably be expected to have a Company Material Adverse Effect.
 
 
 
 
 

 
 
 
Section 4.5   No Undisclosed Liabilities .  As of the date hereof, except (a) for Liabilities reflected on the face of the balance sheet for the six month period ended June 30, 2009 (the “ Balance Sheet ”) and (b) Liabilities of the same type, magnitude and scope as those reflected on the Balance Sheet which have arisen since the Balance Sheet Date in the ordinary course of business, and which would not, in the aggregate, result in a Company Material Adverse Effect, the Company does not have any Liability.
 
Section 4.6   Litigation .  Neither the Company nor any of its subsidiaries is in default under any judgment, order or decree of any governmental entity applicable to their business, which default could reasonably be expected to have a Company Material Adverse Effect.
 
Section 4.7   No Default; Compliance with Applicable Laws   The Company is not in default or violation of any material term, condition or provision of (i) its Certificate of Organization or Operating Agreement or (ii) any law applicable to the Company or its property and assets, and the Company has not received written notice of any violation of or Liability under any of the foregoing (whether material or not).
 
Section 4.8   Broker’s and Finder’s Fees .  To the knowledge of the Company, no Person has, or as a result of the transactions contemplated or described herein will have, any right or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity.
 
Section 4.9   Contracts .
 
(a)   The Company is not in violation or breach of any material contract, except such violations that, in the aggregate, would not result in, or would not reasonably be expected to result in, a Company Material Adverse Effect.  There does not exist any event or condition that, after notice or lapse of time or both, would constitute an event of default or breach under any material Contract on the part of the Company or, to the knowledge of the Company, any other party thereto or would permit the modification, cancellation or termination of any material Contract or result in the creation of any lien upon, or any person  acquiring any right to acquire, any assets of any of the Company, other than any events or conditions that, in the aggregate would not result in, or would not reasonably be expected to result in, a Company Material Adverse Effect. The Company has not received in writing any claim or threat that the Company has breached any of the terms and conditions of any material Contract, other than any material Contracts the breach of which, in the aggregate, would not result in, or would not reasonably be expected to result in, a Company Material Adverse Effect.
 
(b)   The  consent of, or the delivery of notice to or filing with, any party to a material Contract is not required for the execution and delivery by the Company of this Agreement or the consummation of the transactions contemplated under the Agreement.  The Company has made available to Purchaser true and complete copies of all Contracts and other documents requested by Purchaser.
 
 
    Section 4.10 Tax Returns and Audits.  All required federal, state and local Tax Returns of the Company have been accurately prepared and duly and timely filed, and all federal, state and local Taxes required to be paid with
 
 
 
 

 
 
 
respect to the periods covered by such returns have been paid.  The Company is not nor has been delinquent in the payment of any Tax.  The Company has not had a Tax deficiency proposed or assessed against it and the Company has not executed a waiver of any statute of limitations on the assessment or collection of any Tax.  The Company’s federal income Tax Returns nor any state or local income or franchise Tax Returns has been audited by governmental authorities.  The reserves for Taxes reflected on the Balance Sheet are and will be sufficient for the payment of all unpaid Taxes payable by the Company as of the Balance Sheet Date.  Since the Balance Sheet Date, the Company has made adequate provisions on its books of account for all Taxes with respect to its business, properties and operations for such period.  The Company has withheld or collected from each payment made to each of its employees the amount of all Taxes (including, but not limited to, federal, state and local income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and have paid the same to the proper Tax receiving officers or authorized depositaries.  There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Company now pending, and the Company has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.  The Company is not obligated to make a payment, nor is it a party to any agreement that under certain circumstances could obligate it to make a payment, that would not be deductible under Section 280G of the Code.  The Company has not agreed nor is required to make any adjustments under Section 481(a) of the Code (or any similar provision of state, local and foreign law) by reason of a change in accounting method or otherwise for any Tax period for which the applicable statute of limitations has not yet expired.  The Company is not a party to, or is bound by or has any obligation under, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, whether written or unwritten (collectively, “ Tax Sharing Agreements ”), nor does it have any potential liability or obligation to any Person as a result of, or pursuant to, any Tax Sharing Agreements.
 
 
Section 4.11   Patents and Other Intangible Assets .
 
(a)   To the knowledge of the Company, the Company (i) owns or has the right to use, pursuant to a valid license, sublicense, agreement, or permission, free and clear of all Liens, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary for the conduct of their businesses as now conducted or proposed to be conducted without infringing upon or otherwise acting adversely to the right or claimed right of any Person under or with respect to any of the foregoing.
 
(b)   To the knowledge of the Company, the Company owns and has the right to use all trade secrets, if any, including know-how, negative know-how, application know-how, formulas, patterns, programs, devices, methods, techniques, inventions, designs, processes, computer programs, logos, manufacturing, engineering, drawings, engineering specifications, production standards, practices and promotional literature and advertising and technical data and all information that derives independent economic value, actual or potential, from not being generally known or known by competitors (collectively, “ Intellectual Property ”) required for or incident to the development, operation and sale of all products and services sold by the Company, free and clear of any right, Lien or claim of others.  All Intellectual Property can and will be transferred by the Company to the Purchaser as a result of this Agreement and without the consent of any Person other than the Company.
 
 
 
 
 
 

 
 
 
Section 4.12   Employee Benefit Plans; ERISA .
 
(a)   All “employee benefit plans” (within the meaning of Section 3(3) of the ERISA) of the Company and other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs of every type, other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Company, whether written or unwritten and whether or not funded, are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.
 
(b)   There are no pending claims or lawsuits that have been asserted or instituted against any Employee Benefit Plan, the assets of any of the trusts or funds under the Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with respect to the operation of such plan, nor does the Company have any knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to form the basis of any such claim or lawsuit.
 
(c)   There is no pending or, to the knowledge of the Company, threatened investigation, or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Employee Benefit Plan and the Company has no knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.
 
(d)   No actual or, to the knowledge of the Company, contingent Liability exists with respect to the funding of any Employee Benefit Plan or for any other expense or obligation of any Employee Benefit Plan, except as disclosed on the Balance Sheet, and no contingent Liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
 
(e)   No events have occurred or are reasonably expected to occur with respect to any Employee Benefit Plan that would cause a material change in the costs of providing benefits under such Employee Benefit Plan or would cause a material change in the cost of providing such Employee Benefit Plan.
 
Section 4.13   Title to Property and Encumbrances .  The Company has good and valid title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force and effect and which are not in default) free of all Liens except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as do not in the aggregate constitute a Company Material Adverse Effect.
 
Section 4.14   Condition of Properties .  All facilities, machinery, equipment, fixtures and other properties owned, leased or used by the Company are in operating condition, subject to ordinary wear and tear, and are adequate and sufficient for the Company’s existing business.
 
Section 4.15   Insurance Coverage .  There is in full force and effect one or more policies of insurance issued by insurers of recognized responsibility insuring the Company and its properties, products and business against such losses and risks, and in such amounts, as are customary for corporations of established reputation engaged in the same or similar business and similarly situated.  The Company has not been refused any insurance coverage sought or applied for, and the Company has no reason to believe that it will be unable to renew its existing insurance coverage as and when the same shall expire upon terms at least as favorable to those currently in effect, other than possible increases in premiums that do not result from any act or omission of the Company.  No suit, proceeding or action or, to the knowledge of the Company, threat of suit, proceeding or action has been asserted or made against the Company due to alleged bodily injury, disease, medical condition, death or property damage arising out of the function or malfunction of a product, procedure or service designed, manufactured, sold or distributed by the Company.
 
 
 

 
 
 
Section 4.16   Environmental Matters .
 
(a)   To the knowledge of the Company, the Company has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials on any real property on which they now have or previously had any leasehold or ownership interest, except in compliance with all applicable Environmental Laws.
 
(b)   To the knowledge of the Company, the historical and present operations of the business of the Company are in compliance with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have a Company Material Adverse Effect.
 
(c)   There are no material pending or, to the knowledge of the Company, threatened, demands, claims, information requests or notices of noncompliance or violation against or to the Company relating to any Environmental Law; and, to the knowledge of the Company, there are no conditions or occurrences on any of the real property used by the Company in connection with its business that would reasonably be expected to lead to any such demands, claims or notices against or to the Company, except such as have not had, and would not reasonably be expected to have, a Company Material Adverse Effect.
 
(d)   To the knowledge of the Company, (i) the Company has not sent or disposed of, otherwise had taken or transported, arranged for the taking or disposal of (on behalf of itself, a customer or any other party) or in any other manner participated or been involved in the taking of or disposal or release of a Hazardous Material to or at a site that is contaminated by any Hazardous Material or that, pursuant to any Environmental Law, (A) has been placed on the “National Priorities List”, the “CERCLIS” list, or any similar state or federal list, or (B) is subject to or the source of a claim, an administrative order or other request to take “removal”, “remedial”, “corrective” or any other “response” action, as defined in any Environmental Law, or to pay for the costs of any such action at the site; (ii) the Company is not involved in (and has no basis to reasonably expect to be involved in) any suit or proceeding and has not received (and has no basis to reasonably expect to receive) any written notice, request for information or other communication from any governmental authority or other third party with respect to a release or threatened release of any Hazardous Material or a violation or alleged violation of any Environmental Law, and has not received (and has no basis to reasonably expect to receive) written notice of any claims from any Person relating to property damage, natural resource damage or to personal injuries from exposure to any Hazardous Material; and (iii) the Company has timely filed every report required to be filed, acquired all necessary certificates, approvals and permits, and generated and maintained all required data, documentation and records under all Environmental Laws, in all such instances except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
 
 
 
 
 

 
 
 
Section 4.17   Disclosure .  There is no fact relating to the Company that the Company has not disclosed to Purchaser in writing that has had or is currently having a Company Material Adverse Effect.  No representation or warranty by the Company herein and no information disclosed in the exhibits hereto by the Company contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.
 
ARTICLE V                      
REPRESENTATIONS AND WARRANTIES OF P URCHASER
 
Purchaser hereby represents and warrants to the Company as follows:
 
Section 5.1   Organization .  Purchaser (i) is duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) has all licenses, permits, authorizations and other Consents necessary to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and (iii) has all requisite corporate or other applicable power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and presently proposed to be conducted, in each case except where such failures would not have, or be reasonably likely to have, a Purchaser Material Adverse Effect.  Purchaser is duly qualified or authorized to conduct business and is in good standing (or its equivalent) as a foreign corporation or other entity in all jurisdictions in which the ownership or use of its assets or nature of the business conducted by it makes such qualification or authorization necessary, except where the failure to be so duly qualified, authorized and in good standing would not have a Purchaser Material Adverse Effect.
 
Section 5.2   Authorization; Validity of Agreement .  Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Purchaser of this Agreement and all other agreements and instruments to be executed pursuant to this Agreement, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by the Board of Directors of Purchaser and no other action on the part Purchaser is necessary to authorize the execution and delivery of this Agreement and all other agreements and instruments to be executed pursuant to this Agreement and the consummation by Purchaser of the transactions contemplated hereby and thereby.  This Agreement has been duly executed and delivered by the Purchaser and (assuming due and valid authorization, execution and delivery hereof by the Company) is a valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.
 
 
 
 
 

 
 
 
Section 5.3   Consents and Approvals; No Violations .  Neither the execution, delivery or performance of this Agreement by Purchaser nor the consummation of the transactions contemplated hereby will (i) violate any provision of the certificate of incorporation or by-laws of Purchaser; (ii) violate, conflict with or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, require the consent of or result in the creation of any Lien upon any of the properties of Purchaser under any Contract to which Purchaser or any of its properties may be bound; (iii) require any Consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental entity by or with respect to Purchaser or any subsidiary of Purchaser, or (iv) violate any order, writ, judgment, injunction, decree, law, statute, rule or regulation applicable to Purchaser or any of its properties or assets; except, in the cases of clauses (ii), (iii) and (iv), any such violations, conflicts, breaches, defaults or encumbrances, or any failure to receive any such Consent, approval or authorization, or to make any such notice, declaration, filing or registration as will not result in, or could reasonably be expected to result in, a Purchaser Material Adverse Effect.
 
Section 5.4   Litigation .  There is no Action pending or, to the knowledge of the Purchaser, threatened, involving Purchaser or any subsidiary of Purchaser or affecting the officers, directors or employees of Purchaser or any subsidiary of Purchaser with respect to Purchaser’s businesses by or before any governmental entity or by any third party and Purchaser has not received written notice that any such Action is threatened.  Purchaser is not in default under any judgment, order or decree of any governmental entity applicable to its business which could reasonably be expected to have a Purchaser Material Adverse Effect.
 
Section 5.5   No Default; Compliance with Applicable Laws .  Neither Purchaser nor any of Purchaser’s subsidiaries is in default or violation of any material term, condition or provision of (i) their respective articles of incorporation, by-laws or similar organizational documents or (ii) any law applicable to Purchaser or any of Purchaser’s subsidiaries or its property and assets and neither Purchaser nor any of Purchaser’s subsidiaries has received written notice of any violation of or Liability under any of the foregoing (whether material or not).
 
Section 5.6   Broker’s and Finder’s Fees; Broker/Dealer Ownership .  No person(s), firm, corporation or other entity is entitled by reason of any act or omission of Purchaser to any broker’s or finder’s fees, commission or other similar compensation, nor, with respect to the execution, delivery and performance of this Agreement or with respect to the consummation of the transactions contemplated hereby will any such person have any right or valid claim against the Company or Purchaser to any such payment.
 
Section 5.7   Capitalization of Purchaser .  As of the date hereof, the authorized capital stock of Purchaser consists of 65,000,000 shares of common stock and 10,000,000 shares of preferred stock.  As of the date hereof and immediately prior to the Effective Time, there are 5,033,450 shares of common stock, par value $0.001, issued and outstanding and no shares of preferred stock issued and outstanding.  Other than as provided in Article III of this Agreement in connection with securities to be issued or to become issuable in connection with or as a result of this Agreement, Purchaser has no outstanding options, warrants, rights or commitments to issue shares of common stock or any capital stock or other securities of Purchaser, and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Purchaser’s common stock or any capital stock or other securities of Purchaser.  There is no voting trust, agreement or arrangement among any of the beneficial holders of Purchaser’s common stock affecting the nomination or election of directors or the exercise of the voting rights of Purchaser’s common stock.  There are no registration rights or similar rights applicable to any shares of Purchaser’s common stock or any capital stock or other securities of Purchaser.  All outstanding shares of the capital stock of Purchaser are validly issued and outstanding, fully paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any person.  All of the shares of Purchaser’s common stock issued and outstanding immediately prior to the Effective Time have been issued in compliance with the Securities Act and applicable state securities laws and (i) pursuant to effective registration statements filed with the Securities and Exchange Commission and/or (ii) in reliance on valid exemptions from registration or qualification thereunder.
 
 
 
 
 

 
 
 
Section 5.8   Validity of Shares .  The shares of Purchaser’s common stock to be issued in accordance with Article III hereof, when issued and delivered in accordance with the terms hereof, shall be duly authorized, validly issued, fully paid and non-assessable.
 
Section 5.9   SEC Reporting and Compliance .
 
(a)   Purchaser filed a registration statement on Form S-1 under the Securities Act which became effective on May 7, 2008.  Since that date, Purchaser has timely filed with the Commission all registration statements, proxy statements, information statements and reports required to be filed by Purchaser pursuant to the Exchange Act (collectively, the “ Purchaser SEC Documents ”).  Purchaser has not filed with the Commission a certificate on Form 15 pursuant to the Exchange Act.
 
(b)   None of the Purchaser SEC Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not misleading.  Each of the Purchaser SEC Documents complied, and each Purchaser SEC Document to be filed with the Commission prior to the Effective Date shall comply, in all material respects, with the applicable requirements of the Securities Act and the Securities Exchange, as the case may be.  Each of the financial statements (including, in each case, any related notes), contained in the Purchaser SEC Documents, including any Purchaser SEC Documents filed after the date of this Agreement until the Closing, complied, as of its respective filing date, in all material respects with all applicable accounting requirements and the published rules and regulations of the Commission with respect thereto.
 
(c)   Purchaser has not filed, and nothing has occurred with respect to which Purchaser would be required to file, any report on Form 8-K prior to the date hereof.  Prior to and until the Closing, Purchaser will provide to the Company copies of any and all amendments or supplements to the Purchaser SEC Documents filed with the Commission and all subsequent registration statements and reports filed by Purchaser subsequent to the filing of the Purchaser SEC Documents with the Commission and any and all subsequent information statements, proxy statements, reports or notices filed by the Purchaser with the Commission or delivered to the stockholders of Purchaser.
 
(d)   Purchaser is not an “investment company” within the meaning of Section 3 of the Investment Company Act.
 
 
 
 
 
 

 
 
 
 
(e)   The Purchaser Common Stock is presently eligible for quotation and trading on the NASD Over-the-Counter Bulletin Board.
 
(f)   Between the date hereof and the Closing Date, Purchaser shall continue to satisfy any applicable filing requirements of the Exchange Act or the Securities Act, as the case may be, and all other requirements of applicable securities laws.  Immediately upon the Effective Date of this Agreement, Purchaser shall satisfy all applicable filing requirements of the Exchange Act, the Securities Act, and the Commission, disclosing the terms of this Agreement.
 
(g)   To the knowledge of Purchaser, Purchaser has complied with the Securities Act, Exchange Act and all other applicable federal and state securities laws.
 
Section 5.10   No General Solicitation .  In issuing common stock in payment of the purchase price hereunder, neither Purchaser nor anyone acting on its behalf has offered to sell Purchaser’s common stock by any form of general solicitation or advertising.
 
Section 5.11   Financial Statements .  The balance sheets, and statements of income, stockholders’ equity and cash flows (including any notes thereto) contained in the Purchaser SEC Documents (the “ Purchaser Financial Statements ”) (i) have been prepared in accordance with GAAP, (ii) are in accordance with the books and records of the Purchaser, and (iii) present fairly in all material respects the financial condition of the Purchaser at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified.
 
Section 5.12   Absence of Undisclosed Liabilities .  Purchaser has no Liability at or prior to the Closing, except (a) as disclosed in the Purchaser SEC Documents, (b) to the extent set forth on or reserved against in the balance sheet of Purchaser as of June 30, 2009 (the “ Purchaser Balance Sheet ”) or the notes to the Purchaser Financial Statements, (c) current Liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business, consistent with past practice, since June 30, 2009 (the “ Purchaser Balance Sheet Date ”), none of which, individually or in the aggregate, constitutes a Purchaser Material Adverse Effect, (d) attorney’s fees and accounting fees incurred by the Purchaser since the Purchaser Balance Sheet Date, including those related to this Agreement and all of the transactions related thereto and contemplated thereby, including but not limited to preparation and filing of disclosures with the SEC, and (e) by the specific terms of any written agreement, document or arrangement attached as an exhibit to the Purchaser SEC Documents.
 
Section 5.13   Changes .  Since the Purchaser Balance Sheet Date, except as disclosed in the Purchaser SEC Documents, Purchaser has not (a) incurred any debts, obligations or Liabilities, absolute, accrued or, to the Purchaser’s knowledge, contingent, whether due or to become due, except for current Liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or Liability other than, current liabilities shown on the Purchaser Balance Sheet and current Liabilities incurred since the Purchaser Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) that could reasonably be expected to have a Purchaser Material Adverse Effect, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the financial condition of the Purchaser other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a Purchaser Material Adverse Effect, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material Contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Purchaser Balance Sheet or its statement of income for the year ended on the Purchaser Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $1,000 in the aggregate, or (r) entered into any Contract, agreement or license, or otherwise obligated itself, to do any of the foregoing.
 
 
 
 

 
 
 
 
Section 5.14   Tax Returns and Audits .  All required federal, state and local Tax Returns of the Purchaser have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a Purchaser Material Adverse Effect.  The Purchaser is not and has not been delinquent in the payment of any Tax.  The Purchaser has not had a Tax deficiency assessed against it.  None of the Purchaser’s federal income Tax Returns nor any state or local income or franchise Tax Returns has been audited by governmental authorities.  The reserves for Taxes reflected on the Purchaser Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Purchaser with respect to the period ended on the Purchaser Balance Sheet Date.  There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Purchaser now pending, and the Purchaser has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.
 
Section 5.15   Employee Benefit Plans; ERISA .
 
(a)   Except as disclosed in the Purchaser SEC Documents, there are no “employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Purchaser, whether written or unwritten and whether or not funded.  Any plans listed in the Purchaser SEC Documents are hereinafter referred to as the “ Purchaser Employee Benefit Plans .”
 
 
 
 
 

 
 
 
(b)   Any current and prior material documents, including all amendments thereto, with respect to each Purchaser Employee Benefit Plan have been made available to the Company.
 
(c)   All Purchaser Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.
 
(d)   There are no pending, or to the knowledge of the Purchaser, threatened, claims or lawsuits that have been asserted or instituted against any Purchaser Employee Benefit Plan, the assets of any of the trusts or funds under the Purchaser Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Purchaser Employee Benefit Plans or against any fiduciary of a Purchaser Employee Benefit Plan with respect to the operation of such plan.
 
(e)   There is no pending, or to the knowledge of the Purchaser, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Purchaser Employee Benefit Plan and Purchaser has no knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.
 
(f)   No actual or, to the knowledge of Purchaser, contingent Liability exists with respect to the funding of any Purchaser Employee Benefit Plan or for any other expense or obligation of any Purchaser Employee Benefit Plan, except as disclosed on the Purchaser Financial Statements or the Purchaser SEC Documents, and to the knowledge of the Purchaser, no contingent Liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
 
Section 5.16   Interested Party Transactions .  Except as disclosed in the Purchaser SEC Documents, no officer, director or stockholder of the Purchaser or any Affiliate of any such Person or the Purchaser has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Purchaser or (ii) purchases from or sells or furnishes to the Purchaser any goods or services, or (b) a beneficial interest in any Contract to which the Purchaser is a party or by which it may be bound or affected.
 
Section 5.17   Questionable Payments .  Neither the Purchaser, nor to the knowledge of the Purchaser, any director, officer, agent, employee or other Person associated with or acting on behalf of the Purchaser, has used any corporate funds for (a) unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) made any direct or indirect unlawful payments to government officials or employees from corporate funds, (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets, (d) made any false or fictitious entries on the books of record of any such corporations, or (e) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
 
 
 
 

 
 
 
 
Section 5.18   Obligations to or by Stockholders .  Except as disclosed in the Purchaser SEC Documents, the Purchaser has no Liability or obligation or commitment to any stockholder of Purchaser or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Purchaser, nor does any stockholder of Purchaser or any such Affiliate or associate have any Liability, obligation or commitment to the Purchaser.
 
Section 5.19   Schedule of Assets and Contracts .  Except as expressly set forth in this Agreement, the Purchaser Balance Sheet or the notes thereto, the Purchaser is not a party to any Contract not made in the ordinary course of business that is material to the Purchaser.  Purchaser does not own any real property.  Purchaser is not a party to any Contract (a) with any labor union, (b) for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) for the employment of any officer, individual employee or other Person on a full-time basis or any contract with any Person for consulting services, (d) with respect to bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with any or all of the employees of Purchaser or any other Person, (e) relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of Purchaser to any Lien or evidencing any Indebtedness, (f) guaranteeing of any Indebtedness, (g) under which Purchaser is lessee of or holds or operates any property, real or personal, owned by any other Person, (h) under which Purchaser is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by Purchaser, (i) granting any preemptive right, right of first refusal or similar right to any Person, (j) with any Affiliate of Purchaser or any present or former officer, director or stockholder of Purchaser, (k) obligating Purchaser to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (1) containing a covenant not to compete or other restriction on the Purchaser’s ability to conduct a business or engage in any other activity, (m) with respect to any distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) regarding the registration of securities under the Securities Act, (o) characterized as a collective bargaining agreement, or (p) with any Person continuing for a period of more than three months from the Closing Date that involves an expenditure or receipt by Purchaser in excess of $1,000.  The Purchaser maintains no insurance policies and insurance coverage of any kind with respect to Purchaser, its business, premises, properties, assets, employees and agents.  Purchaser has furnished to the Company true and complete copies of all agreements and other documents requested by the Company.
 
Section 5.20   Environmental Matters .
 
(a)   The Purchaser has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials on any real property on which it now has or previously had any leasehold or ownership interest, except in compliance with all applicable Environmental Laws.
 
(b)   The historical and present operations of the business of the Purchaser compliance with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have a Purchaser Material Adverse Effect.
 
 
 
 

 
 
 
(c)   (i) The Purchaser has not, sent or disposed of, otherwise had taken or transported, arranged for the taking or disposal of (on behalf of itself, a customer or any other party) or in any other manner participated or been involved in the taking of or disposal or release of a Hazardous Material to or at a site that is contaminated by any Hazardous Material or that, pursuant to any Environmental Law, (A) has been placed on the “National Priorities List”, the “CERCLIS” list, or any similar state or federal list, or (B) is subject to or the source of a claim, an administrative order or other request to take “removal”, “remedial”, “corrective” or any other “response” action, as defined in any Environmental Law, or to pay for the costs of any such action at the site; (ii) the Purchasers not involved in (and has no basis to reasonably expect to be involved in) any suit or proceeding and has not received (and has no basis to reasonably expect to receive) any written notice, request for information or other communication from any governmental authority or other third party with respect to a release or threatened release of any Hazardous Material or a violation or alleged violation of any Environmental Law, and has not received (and has no basis to reasonably expect to receive) written notice of any claims from any Person relating to property damage, natural resource damage or to personal injuries from exposure to any Hazardous Material; and (iii) the Purchaser has timely filed every report required to be filed, acquired all necessary certificates, approvals and permits, and generated and maintained all required data, documentation and records under all Environmental Laws, in all such instances except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect.
 
(d)   There are no material pending or, to the knowledge of Purchaser, threatened, demands, claims, information requests or notices of noncompliance or violation against or to the Purchaser relating to any Environmental Law; and, to the knowledge of Purchaser, there are no conditions or occurrences on any of the real property used by Purchaser in connection with its business that would reasonably be expected to lead to any such demands, claims or notices against or to Purchaser, except such as have not had, and would not reasonably be expected to have, a Purchaser Material Adverse Effect.
 
Section 5.21   Employees .  Other than pursuant to ordinary arrangements of employment compensation, Purchaser is not under any obligation or liability to any officer, director, employee or Affiliate of Purchaser.
 
Section 5.22     Title to Property and Encumbrances .  Purchaser has good and valid title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force and effect and which are not in default) free of all Liens except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as do not, individually or in the aggregate constitute a Purchaser Material Adverse Effect.
 
Section 5.23   Condition of Properties .  All facilities, machinery, equipment, fixtures and other properties owned, leased or used by Purchaser are in operating condition, subject to ordinary wear and tear, and are adequate and sufficient for the Purchaser’s existing business.
 
Section 5.24   Insurance Coverage .  There is in full force and effect one or more policies of insurance issued by insurers of recognized responsibility insuring Purchaser and its properties, products and business against such losses and risks, and in such amounts, as are customary for corporations of established reputation engaged in the same or similar business and similarly situated.  Purchaser has not been refused any insurance coverage sought or applied for, and Purchaser has no reason to believe that it will be unable to renew its existing insurance coverage as and when the same shall expire upon terms at least as favorable to those currently in effect, other than possible increases in premiums that do not result from any act or omission of Purchaser.  No suit, proceeding or action or, to the best current actual knowledge of Purchaser, threat of suit, proceeding or action has been asserted or made against Purchaser due to alleged bodily injury, disease, medical condition, death or property damage arising out of the function or malfunction of a product, procedure or service designed, manufactured, sold or distributed by Purchaser.
 
 
 
 

 
 
 
Section 5.25   Disclosure .  There is no fact relating to Purchaser that Purchaser has not disclosed to the Company in writing that has had, is having or is reasonably likely to have a Purchaser Material Adverse Effect.  No representation or warranty by Purchaser herein and no information disclosed in the exhibits hereto by Purchaser contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.
 
Section 5.26   No Liabilities. As of the Closing Date, there are no Liabilities or Indebtedness of the Purchaser of any kind whatsoever, whether recorded on the Balance Sheet of Purchaser or not, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such Liability or Indebtedness.  The Purchaser is not a guarantor of any Indebtedness of any other person, firm or corporation.
 
ARTICLE VI                                
CONDUCT OF BUSINESSES PENDING THE EFFECTIVE TIME
 
Section 6.1   Conduct of Business by the Company Pending the Effective Time .  Prior to the Effective Time, unless Purchaser shall otherwise agree in writing or as otherwise contemplated by this Agreement:
 
(i)   the business of the Company shall be conducted only in the ordinary course consistent with the past practice; and
 
(ii)   the Company shall use its reasonable best efforts to preserve intact the business of the Company, to keep available the service of their present officers and key employees, and to preserve the good will of those having business relationships with them.
 
Section 6.2   Conduct of Business by Purchaser Pending the Effective Time .  Prior to the Effective Time, unless the Company shall otherwise agree in writing or as otherwise contemplated expressly permitted by this Agreement:
 
(i)   the current business of Purchaser including all mineral claims and other property shall, in a separate transaction, be disposed of, assigned or sold;
 
(ii)   Purchaser shall not (A) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (B) amend its certificate of incorporation or by-laws; or (C) split, combine or reclassify its capital stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to such stock;
 
 
 
 
 

 
 
 
(iii)   Purchaser shall not, except as provided in this Section 6.2(i), (A) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire shares of, its capital stock; (B) acquire or dispose of any assets other than in the ordinary course of business; (C) incur additional Indebtedness or any other Liabilities or enter into any other transaction except in the ordinary course of business; (D) enter into any Contract, agreement, commitment or arrangement with respect to any of the foregoing except this Agreement, or (E) except as contemplated by this Agreement, enter into any Contract, agreement, commitment or arrangement to dissolve, merge; consolidate or enter into any other material business contract or enter into any negotiations in connection therewith.
 
(iv)   Purchaser will not, nor will it authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by it to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below).  Purchaser will promptly advise the Company in writing of any such inquiries or Acquisition Proposal (or requests for information) and the substance thereof.  As used in this paragraph, “ Acquisition Proposal ” shall mean any proposal for a merger or other business combination involving the Purchaser or for the acquisition of a substantial equity interest in either of it or any material assets of it other than as contemplated by this Agreement.  Purchaser will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any of the foregoing; and
 
(v)   Purchaser will not enter into any new employment agreements with any of their officers or employees or grant any increases in the compensation or benefits of their officers and employees.
 
                                  ARTICLE VII                                
ADDITIONAL AGREEMENTS
 
Section 7.1   Access and Information .  The Company and Purchaser shall each afford to the other and to the other’s accountants, counsel and other representatives reasonable access during normal business hours throughout the period prior to the Effective Time of all of their properties, books, contracts, commitments and records (including but not limited to Tax Returns) and during such period, each shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request, provided that no investigation pursuant to this Section 7.1 shall affect any representations or warranties made herein.  Each party shall hold, and shall cause its employees and agents to hold, in confidence all such information (other than such information that (i) becomes generally available to the public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors, or (ii) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors, provided that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a party hereto or another party until such time as such information is otherwise publicly available); provided , however , that:  (A) any such information may be disclosed to such party’s directors, officers, employees and representatives of such party’s advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential nature of such information); (B) any disclosure of such information may be made as to which the party hereto furnishing such information has consented in writing; and (C) any such information may be disclosed pursuant to a judicial, administrative or governmental order or request provided , that the requested party will promptly so notify the other party so that the other party may seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion of such information which is legally required and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the information furnished.  If this Agreement is terminated, each party will deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.
 
 
 
 

 
 
Section 7.2   Additional Agreements .  Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its commercially reasonable best efforts to satisfy the conditions precedent to the obligations of any of the parties hereto to obtain all necessary waivers, and to lift any injunction or other legal bar to this Agreement (and, in such case, to proceed with this Agreement as expeditiously as possible).  In order to obtain any necessary governmental or regulatory action or non-action, waiver, Consent, extension or approval, Purchaser and the Company agree to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary.  In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Purchaser and the Company shall take all such necessary action.
 
Section 7.3   Publicity .  No party shall issue any press release or public announcement pertaining to this Agreement that has not been agreed upon in advance by Purchaser and the Company, except as Purchaser reasonably determines to be necessary in order to comply with the rules of the Commission; provided that in such case Purchaser will use its best efforts to allow the Company to review and reasonably approve any of the same prior to its release.
 
Section 7.4   Appointment of Directors .  Immediately upon the Effective Time, Purchaser shall, in accordance with Section 2.3(d) , accept the resignations and cause the appointments of those officers and directors of Company identified in Exhibit C hereto, subject to any notice and waiting period requirements of federal law.  At the first annual meeting of Purchaser’s stockholders and thereafter, the election of the new members of Purchaser’s Board of Directors shall be accomplished in accordance with the by-laws of Purchaser.
 
Section 7.5   Name Change .  As soon as practicable on or after the Effective Time, Purchaser shall take all required legal actions to change Purchaser’s corporate name to “Bergio International, Inc.” (the “ Name Change ”).
 
Section 7.6   Stock Purchase Agreement .  As soon as practicable on or after the Effective Time, Purchaser shall enter into a Stock Purchase Agreement with certain shareholders of Purchaser to retire 3,310,000 shares of Purchaser common stock in exchange for the shares in Alba Mineral Exploration, Inc., an Alberta corporation.
 
Section 7.7   Forward Split.  As soon as practicable after the Effective Time, Purchaser shall forward split its outstanding shares on the basis of 12 shares for every share issued and outstanding.
 
                              ARTICLE VIII                                
CONDITIONS OF PARTIES’ OBLIGATIONS
 
Section 8.1   Company Obligations .  The obligations of Purchaser under this Agreement are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in whole or in part by Purchaser.
 
(a)   No Errors, etc. The representations and warranties of the Company and the Members under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.
 
(b)   Compliance with Agreement .  The Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them on or before the Closing Date.
 
(c)   No Company Material Adverse Effect .  Since the date hereof, there shall not have been any event or circumstance that has resulted in a Company Material Adverse Effect, and no event has occurred or circumstance exists that would reasonably be expected to result in a Company Material Adverse Effect.
 
(d)   Certificate of Officers .  The Company shall have delivered to Purchaser a certificate dated the Closing Date, executed on its behalf by the Manager(s) of the Company, certifying the satisfaction of the conditions specified in paragraphs (a), (b) and (c) of this Section 8.1.
 
(e)   No Restraining Action .  No Action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.
 
(f)   Supporting Documents .  Purchaser shall have received the following:
 
(1)   Copies of resolutions of the board and shareholders of the Company authorizing and approving this Agreement and the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered pursuant hereto and thereto.
 
(2)   A certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute any documents referred to in this Agreement and further certifying that the articles of organization and operating agreements of the Company delivered to Purchaser at the time of the execution of this Agreement have been validly adopted and have not been amended or modified since the date hereof.
 
 
 
 

 
 
 
(3)   Evidence as of a recent date of the good standing and corporate existence of each the Company issued by the Secretary of State of the State of New Jersey.
 
Section 8.2   Purchaser Obligations .  The obligations of the Company under this Agreement are subject to the fulfillment at or prior to the Closing of the following conditions any of which may be waived in whole or in part by the Company:
 
(a)   No Errors, etc.   The representations and warranties of Purchaser under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.
 
(b)   Compliance with Agreement .  Purchaser shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them on or before the Closing Date.
 
(c)   No Purchaser Material Adverse Effect .  Since the date hereof, there shall not have been any event or circumstance that has resulted in a Purchaser Material Adverse Effect and no event has occurred or circumstance exists that would be reasonably expected to result in such a Purchaser Material Adverse Effect.
 
(d)   Certificate of Officers .  Purchaser shall have delivered to the Company a certificate dated the Closing Date, executed on its behalf by its President, certifying the satisfaction of the conditions specified in paragraphs (a), (b), and (c) of this Section 8.2 .
 
(e)   Assignment .  Purchaser shall have completed, if necessary, an assignment of all assets and liabilities of the Purchaser immediately prior to the Effective Time in a transaction satisfactory to the Company, as contemplated in Section 6.2(i).
 
(f)   Supporting Documents .  The Company shall have received the following:
 
(1)   Copies of resolutions of Purchaser’s board of directors and, certified by its Secretary, authorizing and approving this Agreement and the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered by them pursuant hereto.
 
(2)   A certificate of incumbency executed by the Secretary of Purchaser certifying the names, titles and signatures of the officers authorized to execute the documents referred to in paragraph (1) above and further certifying that the certificate of incorporation and by-laws of Purchaser appended thereto have not been amended or modified.
 
(3)   A certificate, dated the Closing Date, executed by the Secretary of the Purchaser, certifying that:  (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required to be obtained by Purchaser for the execution, delivery, and consummation of this Agreement shall have been duly made or obtained; and (ii) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted against Purchaser to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.
 
 
 
 

 
 
 
(4)   A certificate of Purchaser’s transfer agent and registrar, certifying as of the business day prior to the Closing Date, a true and complete list of the names and addresses of the record owners of all of the outstanding shares of Purchaser Common Stock, together with the number of shares of Purchaser Common Stock held by each record owner.
 
(5)   The executed resignations of all directors and officers of Purchaser, with the director resignations to take effect following the notice period required by federal law, and (ii) executed releases from each such director and officer in the form and substance acceptable to the Company in their sole discretion.
 
(6)   Evidence as of a recent date of the good standing and corporate existence of each of the Purchaser issued by the Secretary of State of the State of Delaware.
 
(7)   Such additional supporting documentation and other information with respect to the transactions contemplated hereby as the Company may reasonably request.
 
                                ARTICLE IX                                
INDEMNIFICATION AND RELATED MATTERS
 
Section 9.1   Indemnification by Purchaser .  Purchaser shall indemnify and hold harmless the Company (the “ Company Indemnified Parties ”), and shall reimburse the Company Indemnified Parties for, any loss, liability, claim, damage, expense (including, but not limited to, costs of investigation and defense and reasonable attorneys’ fees) or diminution of value (collectively, “ Damages ”) arising from or in connection with (a) any inaccuracy, in any material respect, in any of the representations and warranties of Purchaser in this Agreement or in any certificate delivered by Purchaser to the Company pursuant to this Agreement, or any actions, omissions or statements of fact inconsistent with any such representation or warranty, (b) any failure by Purchaser to perform or comply in any material respect with any covenant or agreement in this Agreement, (c) any claim for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such party with Purchaser in connection with any of the transactions contemplated by this Agreement, (d) Taxes attributable to any transaction or event occurring on or prior to the Closing, (e) any claim relating to or arising out of any Liabilities of either Purchaser on or prior to Closing or with respect to accounting fees arising thereafter, or (f) any litigation, action, claim, proceeding or investigation by any third party relating to or arising out of the business or operations of Purchaser, or the actions of Purchaser or any holder of Purchaser capital stock prior to the Effective Time.
 
 
 
 
 
 

 
 
 
 
Section 9.2   Survival .  All representations, warranties, covenants and agreements of Purchaser contained in this Agreement or in any instrument delivered pursuant to this Agreement shall survive until twelve (12) months after the Effective Date.  The representations and warranties of the Company and the Members contained in this Agreement or in any instrument delivered pursuant to this Agreement will terminate at, and have no further force and effect after, the Effective Time.
 
Section 9.3   Time Limitations .  Purchaser shall not have any liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or agreement to be performed and complied with prior to the Effective Time, unless on or before the twelve month anniversary of the Effective Time (the “ Claims Deadline ”), Purchaser is given notice of a claim with respect thereto, in accordance with Section 9.5 , specifying the factual basis therefore in reasonable detail to the extent then known by the Company Indemnified Parties.
 
Section 9.4   Limitation on Liability .  The obligations of Purchaser to the Company Indemnified Parties set forth in Section 9.1 shall be subject to the following limitations:
 
(a)   The aggregate liability of Purchaser to the Company Indemnified Parties shall not exceed $15,000.
 
(b)   Other than claims based on fraud or for specific performance, injunctive or other equitable relief, the Company Indemnified Parties’ sole and exclusive remedy for any and all claims for Damages pursuant to Section 9.1 hereof shall be the indemnification provided under the terms and subject to the conditions of this Article IX .
 
Section 9.5   Notice of Claims .
 
(a)   If, at any time on or prior to the Claims Deadline, the Company Indemnified Parties shall assert a claim for indemnification pursuant to Section 9.1 , such Company Indemnified Parties shall submit to Purchaser written claim stating:  (i) that a Company Indemnified Party incurred or reasonably believes it may incur Damages and the amount or reasonable estimate thereof of any such Damages; and (ii) in reasonable detail, the facts alleged as the basis for such claim and the section or sections of this Agreement alleged as the basis or bases for the claim.
 
(b)   In the event that any action, suit or proceeding is brought against any Company Indemnified Party with respect to which Purchaser may have liability under this Article IX , the Purchaser shall have the right, at its cost and expense, to defend such action, suit or proceeding in the name and on behalf of the Company Indemnified Party; provided , however , that a Company Indemnified Party shall have the right to retain its own counsel, with fees and expenses paid by Purchaser, if representation of the Company Indemnified Party by counsel retained by Purchaser would be inappropriate because of actual or potential differing interests between Purchaser and the Company Indemnified Party.  In connection with any action, suit or proceeding subject to this Article IX , Purchaser and each Company Indemnified Party agree to render to each other such assistance as may reasonably be required in order to ensure proper and adequate defense of such action, suit or proceeding.  Purchaser shall not, without the prior written consent of the applicable Company Indemnified Parties, which consent shall not be unreasonably withheld or delayed, settle or compromise any claim or demand if such settlement or compromise does not include an irrevocable and unconditional release of such Company Indemnified Parties for any liability arising out of such claim or demand.
 
 
 
 
 

 
 
 
                      ARTICLE X                      
TERMINATION PRIOR TO CLOSING
 
Section 10.1   Termination of Agreement .  This Agreement may be terminated at any time prior to the Closing:
 
(a)   by the mutual written consent of the Company and Purchaser;
 
(b)   by the Company, if Purchaser (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Effective Time, (ii) materially breaches any of its representations, warranties or covenants contained herein, which failure or breach is not cured within thirty (30) days after the Company have notified Purchaser of its intent to terminate this Agreement pursuant to this paragraph (b);
 
(c)   by Purchaser, if the Company (i) fail to perform in any material respect any of their agreements contained herein required to be performed by them on or prior to the Closing Date, (ii) materially breaches any of their representations, warranties or covenants contained herein, which failure or breach is not cured within thirty (30) days after Purchaser has notified the Company of its intent to terminate this Agreement pursuant to this paragraph (c);
 
(d)   by either the Company, on the one hand, or Purchaser, on the other hand, if there shall be any order, writ, injunction or decree of any court or governmental or regulatory agency binding on Purchaser or the Company, which prohibits or materially restrains any of them from consummating the transactions contemplated hereby; provided that the parties hereto shall have used their best efforts to have any such order, writ, injunction or decree lifted and the same shall not have been lifted within ninety (90) days after entry, by any such court or governmental or regulatory agency;
 
(e)   by either the Company, on the one hand, or Purchaser, on the other hand, if the Closing has not occurred on or prior to December 31, 2009, for any reason other than delay or nonperformance of the party seeking such termination;
 
Section 10.2   Termination of Obligations .  Termination of this Agreement pursuant to Section 10.1 hereof shall terminate all obligations of the parties hereunder, except for the obligations under Article IX , Article X , and Sections 11.4 , 11.7 , 11.14, 11.15 and 11.16 hereof; provided , however , that termination pursuant to paragraphs (b) or (c) of Section 10.1 shall not relieve the defaulting or breaching party or parties from any liability to the other parties hereto.
 
                              ARTICLE XI                                
MISCELLANEOUS
 
     Section 11.1   Amendments .  Subject to applicable law, this Agreement may be amended or modified by the parties hereto by written agreement executed by each party to be bound thereby and delivered by duly authorized officers of the parties hereto at any time prior to the Effective Time.
 
 
 
 
 

 
 
Section 11.2   Notices .  Any notice, request, instruction, other document or communications to be given hereunder by any party hereto to any other party hereto shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of delivery if by electronic mail, (c) upon receipt of a transmission confirmation (with a confirming copy delivered personally or sent by overnight courier) if sent by facsimile or like transmission, or (d) on the next business day when sent by Federal Express, United Parcel Service, U.S. Express Mail or other reputable overnight courier for guaranteed next day delivery, as follows:
 
If to Purchaser, to:
Alba Mineral Exploration, Inc.
Attention:  Owen Gibson, CEO
2 Mic Mac Place, Lethbridge
Alberta, Canada T1K 5H6
   
   
   
   
If to the Company, to:
Diamond Information Institute, Inc.
Attention:  Berge Abajian
12 Daniel Road East
Fairfield, New Jersey 07004
   
or to such other persons or addresses as may be designated in writing by the party to receive such notice.  Nothing in this Section 11.2 shall be deemed to constitute consent to the manner and address for service of process in connection with any legal proceeding (including arbitration arising in connection with this Agreement), which service shall be effected as required by applicable law.
 
Section 11.3   Entire Agreement .  This Agreement and the exhibits attached hereto or referred to herein constitute the entire agreement of the parties hereto, and supersede all prior agreements and undertakings, both written and oral, among the parties hereto, with respect to the subject matter hereof and thereof.
 
Section 11.4   Expenses .  Except as otherwise expressly provided herein, whether or not the Closing occurs, all expenses and fees incurred by Purchaser on one hand, and the Company on the other, shall be borne solely and entirely by the party that has incurred the same.
 
Section 11.5   Severability .  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to amend or modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.
 
 
 
 
 

 
 
 
Section 11.6   Successors and Assigns; Assignment .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the parties hereto without, in the case of Purchaser, the prior written approval of the Company and, in the case of the Company, the prior written approval of Purchaser.
 
Section 11.7   No Third Party Beneficiaries .  Except as set forth in Section 9.1 and Section 11.6 , nothing herein expressed or implied shall be construed to give any person other than the parties hereto (and their successors and assigns as permitted herein) any legal or equitable rights hereunder.
 
Section 11.8   Counterparts; Delivery by Facsimile .  This Agreement may be executed in multiple counterparts, and by the different parties hereto in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement.  This Agreement and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by electronic mail, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
 
Section 11.9   Waiver .  At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto; (b) waive any inaccuracies in the representations and breaches of the warranties of the other party contained herein or in any document delivered pursuant hereto; and (c) waive compliance by the other party with any of the agreements or conditions contained herein.  Any such extension or waiver will be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby.
 
Section 11.10   No Constructive Waivers .  No failure or delay on the part of any party hereto in the exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, agreement or covenant herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.  No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
 
Section 11.11   Further Assurances .  The parties hereto shall use their commercially reasonable efforts to do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments or documents as any other party hereto may reasonably request in order to carry out fully the intent and purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
 
 
 
 

 
 
 
 
Section 11.12   Recitals .  The recitals set forth above are incorporated herein and, by this reference, are made part of this Agreement as if fully set forth herein.
 
Section 11.13   Headings .  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
 
Section 11.14   Governing Law .  This Agreement and the agreements, instruments and documents contemplated hereby shall be governed by and construed and enforced in accordance with the laws of the State of New Jersey without regard to its conflicts of law principles.
 
Section 11.15   Dispute Resolution .  The parties hereto shall initially attempt to resolve all claims, disputes or controversies arising under, out of or in connection with this Agreement by conducting good faith negotiations amongst themselves.  If the parties hereto are unable to resolve the matter following good faith negotiations, the matter shall thereafter be resolved by binding arbitration and each party hereto hereby waives any right it may otherwise have to the resolution of such matter by any means other than binding arbitration pursuant to this Section 11.15 .  Whenever a party shall decide to institute arbitration proceedings, it shall provide written notice to that effect to the other parties hereto.  The party giving such notice shall, however, refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice.  During this period, the parties shall make good faith efforts to amicably resolve the claim, dispute or controversy without arbitration.  Any arbitration hereunder shall be conducted in the English language under the commercial arbitration rules of the American Arbitration Association.  Any such arbitration shall be conducted in New Jersey by a panel of three arbitrators:  one arbitrator shall be appointed by each of Purchaser and the Company; and the third shall be appointed by the American Arbitration Association.  The panel of arbitrators shall have the authority to grant specific performance.  Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.  In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on the claim, dispute or controversy in question would be barred under this Agreement or by the applicable statute of limitations.  The prevailing party in any arbitration in accordance with this Section 11.15 shall be entitled to recover from the other party, in addition to any other remedies specified in the award, all reasonable costs, attorneys’ fees and other expenses incurred by such prevailing party to arbitrate the claim, dispute or controversy.
 
Section 11.16   Interpretation .
 
(a)   When a reference is made in this Agreement to a section or article, such reference shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary.
 
(b)   Whenever the words “ include ”, “ includes ” or “ including ” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
 
(c)   The words “ hereof ”, “ hereby ”, “ herein ” and “ herewith ” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified.
 
 
 
 

 
 
 
(d)   The words “ knowledge ,” or “ known to ,” or similar terms, when used in this Agreement to qualify any representation or warranty, refer to the knowledge or awareness of certain specific facts or circumstances related to such representation or warranty of the persons in the Applicable Knowledge Group (as defined herein) which a prudent business person would have obtained after reasonable investigation or due diligence on the part of any such person.  For the purposes hereof, the “ Applicable Knowledge Group ” with respect to the Company shall be John K. Harris.  For the purposes hereof, the “ Applicable Knowledge Group ” with respect to Purchaser shall be Anusha Kumar.
 
(e)   The word “ subsidiary ” shall mean any entity of which at least a majority of the outstanding shares or other equity interests having ordinary voting power for the election of directors or comparable managers of such entity is owned, directly or indirectly by another entity or person.
 
(f)   For purposes of this Agreement, “ ordinary course of business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
 
(g)   The plural of any defined term shall have a meaning correlative to such defined term, and words denoting any gender shall include all genders.  Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.
 
(h)   A reference to any legislation or to any provision of any legislation shall include any modification or re-enactment thereof, any legislative provision substituted therefore and all regulations and statutory instruments issued thereunder or pursuant thereto, unless the context requires otherwise.
 
(i)   The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
 
[ The remainder of this page is intentionally left blank ]
 

 
 

 
 
 
 
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written by their respective officers thereunto duly authorized.
 
COMPANY:
 
DIAMOND INFORMATION INSTITUTE, INC.
 
By:
 
/s/Berge Abajian
Name:
Berge Abajian
Title:
President and CEO
 
PURCHASER:
 
ALBA MINERAL EXPLORATION, INC.
 
 
 
By:
 
/s/Own Gibson
Name:
Owen Gibson
Title:
President and CEO









Schedule 2.1
Excluded Obligations

None
 
   
   
   
   
   


 
 

 
 
 
 
Schedule 3.1
 

 
 

 

 
Exhibit A

Articles of Incorporation of Purchaser

See attached.

 
 
 
 

 
 
 
Exhibit B

By-Laws of Purchaser

See attached.

 
 
 
 

 
 
 
Exhibit C

Officers and Directors of Purchaser
— Pre-Effective Time and Post-Effective Time—


Pre-Effective Time : Owen Gibson, President, Secretary/ Treasurer, CEO, CFO and sole Director

Following Notice Filings :

The following persons shall be appointed as Officers and Directors of Purchaser:


Name
Office(s)
Berge Abajian
President, CEO, and Director




 
STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of October 20, 2009, is made by and among Alba Mineral Exploration, Inc., a Delaware corporation (“ Seller ”), Owen Gibson, Joan Gibson, Darcy Brann, Duane Schaffer, Lindsay Devine, and Dennis Rodowitz (“ Buyers ”).
 
RECITALS
 
A.           Seller owns all of the issued and outstanding shares (the “ Shares ”) of Alba Mineral Exploration, Inc., an Alberta corporation (the “ Company ”), which Shares constitute, as of the date hereof, all of the issued and outstanding capital stock of the Company.
 
B.           Buyers desire to purchase the Shares and Seller desires to sell the Shares (the “Purchase”) for the purchase price of $100 and the cancellation of all of Buyers shares in Seller, which total 3,310,000 shares of common stock (the “ Purchase Price ”) upon the terms and subject to the conditions set forth herein.
 
Accordingly, the parties hereto agree as follows:
 
1.            Purchase and Sale of Stock .
 
(a)            Purchased Shares . Subject to the terms and conditions provided below, Seller shall sell and transfer to Buyers and Buyers shall purchase from Seller, on the Closing Date (as defined in Section 1(c)), all of the Shares.
 
(b)            Purchase Price .  The Purchase Price for the Shares shall be deliverable as provided in Section 2(b).
 
(c)            Closing . The closing of the transactions contemplated in this Agreement (the “ Closing ”) shall take place as soon as practicable following the execution of this Agreement.  The date on which the Closing occurs shall be referred to herein as the Closing Date (the “ Closing Date ”).
 
2.            Closing .
 
(a)            Transfer of Shares . At the Closing, Seller shall deliver to Buyers certificates representing the Shares, duly endorsed to Buyers or as directed by Buyers, which delivery shall vest Buyers with good and marketable title to all of the issued and outstanding shares of capital stock of the Company, free and clear of all liens and encumbrances.
 
(b)   Payment of Purchase Price . At the Closing, Buyers shall deliver to Seller funds representing the Purchase Price deliverable in the form of a cashier’s check payable to Seller.
 
3.            Representations and Warranties of Seller . Seller represents and warrants to Buyers as of the date hereof as follows:
 
 
 
 

 
 
(a)            Corporate Authorization; Enforceability . The execution, delivery and performance by Seller of this Agreement is within the corporate powers and has been, duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
 
(b)            Governmental Authorization . The execution, delivery and performance by Seller of this Agreement requires no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.
 
(c)            Non-Contravention; Consents . The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby do not (i) violate the certificate of incorporation or bylaws of Seller or (ii) violate any applicable Law or Order.
 
4.            Representations and Warranties of Buyers . Buyers represent and warrant to Seller as of the date hereof as follows:
 
(a)            Enforceability . The execution, delivery and performance by Buyers of this Agreement is within Buyers’ powers. This Agreement has been duly executed and delivered by Buyers and constitutes the valid and binding agreement of Buyers, enforceable against Buyers in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.
 
(b)            Governmental Authorization . The execution, delivery and performance by Buyers of this Agreement require no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.
 
(c)            Non-Contravention; Consents . The execution, delivery and performance by Buyers of this Agreement, and the consummation of the transactions contemplated hereby do not violate any applicable Law or Order.
 
(d)            Purchase for Investment .  Buyers are financially able to bear the economic risks of acquiring an interest in the Company and the other transactions contemplated hereby, and has no need for liquidity in this investment. Buyers has such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of the Company, so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares. Buyers is acquiring the Shares solely for his own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or an exemption from such registration is available. Buyers has (i) received all the information he has deemed necessary to make an informed investment decision with respect to the acquisition of the Shares, (ii) had an opportunity to make such investigation as he has desired pertaining to the Company and the acquisition of an interest therein, and to verify the information which is, and has been, made available to him and (iii) had the opportunity to ask questions of Seller concerning the Company. Buyers have received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyers realizes that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyers understands that any resale of the Shares by him must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for the Company at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyers acknowledge and consents that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:
 
 
 
 

 
 
 
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.
 
Buyers understand that the Shares are being sold to him pursuant to the exemption from registration of the Securities Act and that Seller is relying upon the representations made herein.
 
(e)            Liabilities .  Following the Closing, Seller will have no debts, liabilities or obligations relating to the Company or its business or activities, whether before or after the Closing, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to the Company or its business and that may survive the Closing.
 
(f)            Capitalization . As of the date hereof, Seller owns the Shares, which shares represent 100% of the authorized, issued and outstanding capital stock of the Company. The Shares are duly authorized, validly issued, fully-paid, non-assessable and free and clear of any Liens.
 
 
 
 
 

 
 
5.            Indemnification and Release .
 
(a)            Indemnification . Buyers covenant and agree to indemnify, defend, protect and hold harmless Seller, and its officers, directors, employees, stockholders, agents, representatives and affiliates (collectively, together with Seller, the “ Seller Indemnified Parties ”) at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (collectively, “ Losses ”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of Buyers set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement on the part of Buyers under this Agreement, (iii) any debt, liability or obligation of the Company, whether incurred or arising prior to the date hereof or after, (iv) any debt, liability or obligation of Seller for actions taken prior to the date of this Agreement, including, without limitation, any amounts due or owing to any former officer, director or Affiliate of Seller, (v) the conduct and operations of the business of the Company whether before or after the Closing, (vi) claims asserted against the Company whether arising before or after the Closing, or (vii) any federal or state income tax payable by Seller and attributable to the transaction contemplated by this Agreement or activities prior to the date of this Agreement or with respect to the Company after the date of this Agreement.
 
(b)            Third Party Claims .
 
(i)           If any claim or liability (a “ Third-Party Claim ”) should be asserted against any of the Seller Indemnified Parties (the “ Indemnitee ”) by a third party after the Closing for which Buyers has an indemnification obligation under the terms of Section 5(a), then the Indemnitee shall notify Buyers (the “ Indemnitor ”) within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “ Claim Notice ”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and in connection therewith and to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (ii) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.
 
 
 
 
 

 
 
 
 
(ii)           If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate. The Indemnitor shall promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.
 
(c)            Non-Third-Party Claims . Upon discovery of any claim for which Buyers has an indemnification obligation under the terms of this Section 5 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyers of such claim and, in any case, shall give Buyers such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyers shall not excuse Buyers from any indemnification liability except to the extent that Buyers is materially and adversely prejudiced by such failure.
 
(d)            Release .  Buyers, on behalf of himself and his Related Parties, hereby releases and forever discharges Seller and its individual, joint or mutual, past and present representatives, Affiliates, officers, directors, employees, agents, attorneys, stockholders, controlling persons, subsidiaries, successors and assigns (individually, a “ Releasee ” and collectively, “ Releasees ”) from any and all claims, demands, proceedings, causes of action, orders, obligations, contracts, agreements, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which Buyers or any of his Related Parties now have or have ever had against any Releasee. Buyers hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter released hereby. “ Related Parties ” shall mean, with respect to Buyers, (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with Buyers, (ii) any Person in which Buyers hold a Material Interest or (iii) any Person with respect to which Buyers serves as a general partner or a trustee (or in a similar capacity). For purposes of this definition, “ Material Interest ” shall mean direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.
 
6.            Definitions . As used in this Agreement:
 
(a)           “ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person. For the purposes of this definition, “ Control ,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” have meanings correlative to the foregoing;
 
 
 
 

 
 
 
 
(b)           “ Governmental Authority ” means any domestic or foreign governmental or regulatory authority;
 
(c)           “ Law ” means any federal, state or local statute, law, rule, regulation, ordinance, code, Permit, license, policy or rule of common law;
 
(d)           “ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person will be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset;
 
(e)           “ Order ” means any judgment, injunction, judicial or administrative order or decree;
 
(f)           “ Permit ” means any government or regulatory license, authorization, permit, franchise, consent or approval; and
 
(h)           “ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
 
7.            Miscellaneous .
 
(a)            Counterparts . This Agreement may be signed in any number of counterparts, each of which will be deemed an original but all of which together shall constitute one and the same instrument.
 
(b)            Amendments and Waivers .
 
(i)           Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.
 
(ii)           No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by Law.
 
 
 
 
 

 
 
 
(c)            Successors and Assigns . The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer (including by operation of Law) any of its rights or obligations under this Agreement without the consent of each other party hereto.
 
(d)            No Third Party Beneficiaries . This Agreement is for the sole benefit of the parties hereto and their permitted successors and assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto, those referenced in Section 5 above, and such permitted successors and assigns, any legal or equitable rights hereunder.
 
(e)            Governing Law . This Agreement will be governed by, and construed in accordance with, the internal substantive law of the State of Delaware.
 
(f)            Headings . The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof.
 
(g)            Entire Agreement . This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof of this Agreement.
 
(h)            Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of the provisions of this Agreement (or the application of such provision in other jurisdictions or to Persons or circumstances other than those to which it was held invalid, illegal or unenforceable) will in no way be affected, impaired or invalidated, and to the extent permitted by applicable Law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the parties prior to the determination of such invalidity or unenforceability.
 
(i)            Notices . Any notice, request or other communication hereunder shall be given in writing and shall be served either personally, by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:
 
If to Buyers :
Owen Gibson
2 Mic Mac Place
Lethbridge, AB, Canada T1K 5H6
If to Seller :
Alba Mineral Exploration, Inc.
c/o Cane Clark LLP
3273 East Warm Springs
Las Vegas, NV 89120

[Balance of Page Intentionally Left Blank.]
 
 
 
 
 

 
 
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, effective as of the date first above written.
 
ALBA MINERAL EXPLORATION, INC.


                          By: /s/Berge Abajian
     Name: Berge Abajian
     Title: President




________________________
Owen Gibson


________________________
Joan Gibson


________________________
Darcy Brann


________________________
Duane Schaffer


________________________
Lindsay  Devine


________________________
Dennis Rodowitz




 
EXHIBIT 99.1


Audited financial statements of DII, Inc. for
the years ended December 31, 2008 and 2007 and Unaudited financial statements for the interim period ended June 30, 2009
 
 
 
 
 
DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO
 
BALANCE SHEETS
 
             
   
June 30,
   
December 31,
 
   
2009
      2008 *
   
(Unaudited)
         
               
Assets:
             
Current Assets:
             
Accounts Receivable – Net
  $ 329,549     $ 713,194  
Inventory
    1,458,836       1,326,989  
Prepaid Expenses
    2,899       39,138  
                 
Total Current Assets
    1,791,284       2,079,321  
                 
Property and Equipment – Net
    180,146       160,983  
                 
Other Assets:
               
Investment in Unconsolidated Affiliate
    5,000       5,000  
                 
Total Assets
  $ 1,976,430     $ 2,245,304  
                 
*Derived from audited financial statements for the year ended December 31, 2008 (See Form 10-K
Annual Report filed on March 26, 2009 with the Securities and Exchange Commission).
 
                 
See Notes to Financial Statements.
               

 
 
 
 

 
 

 
DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO
 
BALANCE SHEETS
 
             
   
June 30,
   
December 31,
 
   
2009
      2008 *
   
(Unaudited)
         
               
Liabilities and Stockholders' (Deficit) Equity:
             
Current Liabilities:
             
Cash Overdraft
  $ 26,925     $ 7,345  
Accounts Payable and Accrued Expenses
    434,144       446,892  
Bank Lines of Credit – Net
    922,858       910,449  
Current Maturities of Notes Payable
    80,335       82,015  
Current Maturities of Capital Leases
    21,343       23,402  
Advances from Stockholder – Net
    407,566       394,532  
Sales Returns and Allowances Reserve
    68,920       132,353  
                 
Total Current Liabilities
    1,962,091       1,996,988  
                 
Long-Term Liabilities
               
Notes Payable
    138,542       97,270  
Capital Leases
    28,619       39,092  
                 
Total Long-Term Liabilities
    167,161       136,362  
                 
Commitments and Contingencies
    --       --  
                 
Stockholders' (Deficit) Equity
               
Common Stock - $.001 Par Value, 25,000,000 Shares Authorized, 11,813,100 and 11,643,100 Shares Issued and Outstanding as of June 30, 2009 and December 31, 2008, respectively
    11,814       11,643  
Additional Paid-In Capital
    1,653,535       1,599,707  
Accumulated Deficit
    (1,818,171 )     (1,499,396 )
                 
Total Stockholders' (Deficit) Equity
    (152,822 )     111,954  
                 
Total Liabilities and Stockholders' (Deficit) Equity
  $ 1,976,430     $ 2,245,304  
                 
*Derived from audited financial statements for the year ended December 31, 2008 (See Form 10-K
Annual Report filed on March 26, 2009 with the Securities and Exchange Commission).
 
                 
See Notes to Financial Statements.
               

 
 
 
 

 
 
 
 
 
 
DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO
   
STATEMENTS OF OPERATIONS
(Unaudited)
             
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2009
 
2008
 
2009
 
2008
               
Sales – Net
$263,581
 
$ 362,719
 
$454,307
 
$642,883
               
Cost of Sales
181,422
 
167,016
 
361,694
 
302,129
               
Gross Profit
82,159
 
195,703
 
92,613
 
340,754
               
Selling Expenses
82,002
 
80,741
 
130,272
 
143,765
               
General and Administrative Expenses
             
Share-Based Compensation
5,000
 
83,750
 
10,000
 
267,500
Common Stock Issued for Professional Services
2,000
 
100,000
 
44,000
 
250,000
Other
84,788
 
140,633
 
180,547
 
278,571
               
Total General and Administrative expenses
91,788
 
324,383
 
234,547
 
796,071
               
Total Operating Expenses
173,790
 
405,124
 
364,819
 
939,836
               
Loss from Operations
(91,631)
 
(209,421)
 
(272,206)
 
(599,082)
               
Other Income [Expense]
             
Interest Expense
(24,128)
 
(23,103)
 
(45,647)
 
(56,249)
Other Income
--
 
829
 
1,158
 
1,369
               
Total Other Income [Expense]
(24,128)
 
(22,274)
 
(44,489)
 
(54.880)
               
Loss Before Income Tax Provision [Benefit]
(115,759)
 
(231,695)
 
(316,695)
 
(653,962)
               
Income Tax Provision [Benefit]
1,560
 
(106,898)
 
2,080
 
(168,446)
               
Net Loss
$(117,319)
 
$(124,797)
 
$(318,775)
 
$(485,516)
               
Net Loss Per Common Share - Basic and Diluted
$         (0.01)
 
$        (0.01)
 
 
 $        (0.03)
 
 
$        (0.04)
               
Weighted Average Common Shares Outstanding -
Basic and Diluted
11,813,100
 
11,344,199
 
 
11,779,564
 
 
13,249,460
 
 
 
 
 
 

 
 

 
 
STATEMENTS OF CASH FLOWS (Unaudited)
 
             
   
Six Months Ended June 30,
 
   
2009
   
2008
 
             
             
Operating Activities
           
Net Loss
  $ (318,775 )   $ (485,516 )
Adjustments to Reconcile Net Loss
               
to Net Cash (Used in) Operating Activities:
               
Sales Returns and Allowances Reserve
    (63,432 )     9,672  
Depreciation and Amortization
    31,902       30,866  
Share-Based Compensation
    10,000       267,500  
Services Rendered for Common Stock
    44,000       250,000  
Amortization of Deferred Compensation
    --       14,307  
Deferred Tax Benefit
    --       (171,375 )
Allowance for Doubtful Accounts
    6,000       --  
                 
Changes in Assets and Liabilities
               
[Increase] Decre